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Strategic Priorities – A New Policy Framework

213The Report of the World Commission on Dams

Chapter 8

Strategic Priorities –A New Policy Framework for the Developmentof Water and Energy Resources

Based on the findings of the

WCD’s Global Review this

chapter develops the Commission’s

rationale and recommendations in

the form of seven strategic priorities

and related policy principles for

future decision-making. It builds on

previous chapters, starting with

Chapter 1 which locates the dams

debate in a broader context. This

context includes the history of water

resources management and large

dams, the big increase in dam

construction during the latter half of

the 20th century, the subsequent

emergence of conflict and the issues

Chapter 8

Dams and Development: A New Framework for Decision-Making214

and interests that gave rise to the establish-ment of the Commission.

Chapter 8 draws extensively on the Know-ledge Base summarised in Chapters 2 to 6which review the performance and impactsof dams, the decision-making process andthe available options for providing waterand energy services. Much of this workinvolved reviewing existing information,but the Commission also collected impor-tant new information on all aspects of damsoperation and management, especially theirsocial and environmental impacts. The widerange of consultations with affected partiesis an important contribution to knowledgeabout dams in development and develop-ment practice in general.

In Chapter 7 the Commission moved fromthe review of past experience to look atdirections for the future. The chapteraddresses the dams debate in the context ofthe wider debate on equitable and sustainabledevelopment and the corresponding frame-work of internationally accepted norms andstandards. It introduces the rights-and-risks

approach for achieving negotiated outcomes.Chapter 8 takes this forward, moving from atraditional top-down, technology focusedapproach to advocate significant innovationsin assessing options, managing existing dams,gaining public acceptance and negotiating andsharing benefits.

The Commission sets out this constructiveand innovative way forward for decision-making in the form of the seven strategicpriorities listed here and elaborated in subse-quent sections of the chapter (see Figure 8.1).

The priorities are:

■ Gaining Public Acceptance

■ Comprehensive Options Assessment

■ Addressing Existing Dams

■ Sustaining Rivers and Livelihoods

■ Recognising Entitlements and SharingBenefits

■ Ensuring Compliance

■ Sharing Rivers for Peace, Developmentand Security

A key message and a set of policy principlessupport each of the seven strategic priorities.They are expressed in the form of achievedoutcomes. A section on the rationale explainsthe Commission’s thinking on each strategicpriority and an elaboration looks at broaderissues involved in achieving the strategicpriority. These strategic priorities provideguidelines for all affected parties on a new wayforward – one that is founded on achievingequitable and sustainable developmentthrough a process that successfully integratessocial, economic and environmental consider-ations into decision-making on large dams andtheir alternatives.

Chapter 9 provides an operational approachfor applying these priorities to the planningand project cycles.

Gainingpublic

acceptance

Comprehensiveoptions

assessment

Addressingexistingdams

Sustainingrivers andlivelihoods

Recognisingentitlementsand sharing

benefits

Ensuringcompliance

Sharingrivers forpeace,

developmentand security

Equitable andsustainable

development ofwater and

energyresources

Figure 8.1 The WCD’s seven strategic priorities



Strategic Priority 1

Gaining Public Acceptance

Public acceptance of key decisions is essential for equitable and sustainable water andenergy resources development. Acceptance emerges from recognising rights, addressingrisks, and safeguarding the entitlements of all groups of affected people, particularly indig-enous and tribal peoples, women and other vulnerable groups. Decision-making processesand mechanisms are used that enable informed participation by all groups of people, andresult in the demonstrable acceptance of key decisions. Where projects affect indigenousand tribal peoples, such processes are guided by their free, prior and informed consent.

Rationale

Because of their scale and complexity, damsaffect the existing rights of different groupsand create a wide range of significant risksfor a diverse range of interest groups.Among those affected are indigenous andtribal peoples, women and other vulnerablegroups who have been shown to sufferdisproportionately. This has been com-pounded by negligible participation of thesegroups in decision-making processes, withthe result that planning processes for largedams have frequently overlooked gender andequity aspects. The vulnerability of thesegroups stems from the failure to recognise, orrespect their rights, and from the significantinvoluntary risks imposed on them.

Failure to recognise the rights of all affectedgroups, whether legally sanctioned or not,

coupled with the significant involuntary riskimposed on the most vulnerable, is centralto the dams debate and associated conflicts.

To be socially legitimate and producepositive and lasting outcomes, developmentprojects should provide forgreater involvement of allinterested parties. A fair, in-formed and transparent decision-making process, based on theacknowledgement and protectionof existing rights and entitle-ments, will give all stakeholdersthe opportunity to fully andactively participate in thedecision-making process. Insteadof exacerbating existing inequali-ties, water and energy resourcesdevelopment should be opportu-nities for achieving a high level

A fair, informed andtransparent decision-making process, basedon theacknowledgement andprotection of existingrights and entitlements,will give allstakeholders theopportunity to fully andactively participate inthe decision-makingprocess.

Key Message

Effective implementation of this strategic priority depends on applying these policy principles:

1.1 Recognition of rights and assessment of risksare the basis for the identification andinclusion of stakeholders in decision-makingon energy and water resources development.

1.2 Access to information, legal and other supportis available to all stakeholders, particularlyindigenous and tribal peoples, women andother vulnerable groups, to enable theirinformed participation in decision-makingprocesses.

1.3 Demonstrable public acceptance of all keydecisions is achieved through agreementsnegotiated in an open and transparentprocess conducted in good faith and with theinformed participation of all stakeholders.

1.4 Decisions on projects affecting indigenous andtribal peoples are guided by their free, priorand informed consent achieved throughformal and informal representative bodies.

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of equity. The planning process should besensitive to, and take account of, social andeconomic disparities, and devise and imple-ment mechanisms for addressing them.

Recognising indigenous and tribalpeople’s rights

International and national policy makingincreasingly recognise that historical andcontinuing wrongs committed againstindigenous and tribal peoples call fordistinct measures to protect their rights.These measures include the free, prior andinformed consent of indigenous and tribalpeoples to developments that may affectthem. To achieve this, the participation ofindigenous and tribal peoples must becomean integral part of the decision-makingprocess. This is increasingly being recog-nised in international and national law.

International legal instruments, such asConventions 107 and 169 of the Interna-tional Labour Organisation and the evolv-ing United Nations Draft Declaration on theRights of Indigenous Peoples, recognise andsupport the concept of free, prior and

informed consent. Otherorganisations reflect thistrend including the Inter-American DevelopmentBank through its operationalpolicy, which requiresinformed consent of indige-nous and tribal peoples toresettlement and compensa-

tion measures. Similar reforms are found atnational level in a number of countries.1

Through acknowledging the rights ofvulnerable groups, and providing for theirfull and active participation in the decision-making process, all the risks associated witha decision can be addressed. Requiring thefree, prior and informed consent of indige-

nous and tribal peoples empowers them atthe negotiating table.

Negotiations conducted in good faith thatlead to an agreed outcome would securewider acceptance of development policiesand projects.

Elaboration of Policy Principles

1.1 Recognition of rights and assessmentof risks are the basis for the identifica-tion and inclusion of stakeholders indecision-making on energy and waterresources development.

Water and energy resource developmentprojects can affect the existing rights ofcommunity groups in many different waysand can lead to a variety of risks. Legal andcustomary rights take many forms, includinglivelihood, resources, habitat, social net-works and cultural heritage. Recognisingthis variety makes it possible to identify therisks facing communities.

Identifying rights and risks and recognisinghow they affect different parties givesplanners an objective basis for identifyingstakeholders. These stakeholders mustparticipate fully and actively in the deci-sion-making process and be party to allnegotiated agreements throughout theprocess, from options assessment to finalimplementation, operation and monitoring.The involvement of women and othervulnerable groups in decision-making shouldbe ensured at all stages of the planning andimplementation process. There should beclear consideration for the vulnerabilitiesthat expose women to project impacts(displacement, changes in the resource baseand resulting disruptions of social and eco-nomic resources and networks) and for thespecific obstacles that reduce their opportuni-ties to share benefits generated by the project.

Identifying rights and risksand recognising how they

affect different parties givesplanners an objective basis

for identifying stakeholders.



At the needs and options assessment stage,strategic impact assessment enables identifi-cation of stakeholders. Impoverishment riskassessment conducted at the pre-feasibilitystage will enable identification of stakehold-ers bearing risk voluntarily and involuntarilyfor participation in the decision-makingprocess.

1.2 Access to information, legal andother support is available to allstakeholders, particularly indigenousand tribal peoples, women and othervulnerable groups, to enable theirinformed participation in decision-making processes.

Various stakeholders have significantlydifferent capacities to participate fully andactively in the development planningprocess. Rural communities, indigenous andtribal peoples, women and other vulnerablegroups are at a disadvantage in accessing legaland financial resources and in their capacity toparticipate in negotiating decisions.

In order for these groups to participate fullyand actively in negotiations, they needaccess to adequate resources, including legaland other professional support. Communi-ties also need sufficient time to examinevarious proposals and to consult amongstthemselves.

Resources committed to achieving theseends must target a continuing process ofcapacity building.

1.3 Demonstrable public acceptance ofall key decisions is achieved throughagreements negotiated in an openand transparent process conductedin good faith and with the informedparticipation of all stakeholders.

Participatory processes need to secure publicacceptance of plans and projects for water

and energy resources development. Toachieve mutually agreed outcomes, stake-holders should negotiate through recognisedstakeholder bodies. Public acceptance of thedecision reached by stakeholders throughthis process should guide progress at keystages in the assessment, selection, planningand implementation of the project.

The following key principles define thenature of open and transparent decision-making processes. The process:

■ is democratic, accountable and enjoyspublic confidence;

■ safeguards the rights and entitlements ofvulnerable groups by addressing imbal-ances in political power;

■ promotes women’s participation andgender equity;

■ is guided by the free, prior and informedconsent of indigenous and tribal peoples;and

■ is based on the willing participation ofall parties negotiating in good faiththroughout all key stages, from optionsassessment to final implementation,operation and monitoring.

Negotiations should result in demonstrablepublic acceptance of binding formal agree-ments among the interested parties withclear, implementable institutional arrange-ments for monitoring compliance andredressing grievances.

A stakeholder forum can facilitate thisprocess. This forum could be an existingplanning institution located at the local,sub-national and national levels. Countriesthat already have such planning institutionsmust ensure representation of rural commu-nities, indigenous and tribal peoples andother stakeholders in them. Countries

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without such planning institutions shouldconsider creating a stakeholder forum forthe purpose (see Chapter 9 for guidelines).

Negotiating agreementsReaching a negotiated agreement may needassistance from an agreed independent thirdparty from time to time. This assistance isbest provided through an independentdispute resolution body that:

■ is constituted with the participation andagreement of stakeholders; and

■ has the necessary skills, legal and admin-istrative capacity for this purpose.

This body should agree on a negotiatingprocess with all stakeholders at the outset.

Stakeholders should referdisagreements on any aspects ofthe negotiations to this body toexamine them and provideassistance to the parties. Thisincludes determining whetherstakeholders are negotiating ingood faith and suggesting waysof reaching a settlement.

Demonstrating public acceptance, andupholding negotiated decisions, is bestachieved through binding and formal agree-ments. They must include mechanisms forhearing and settling subsequent grievances.

The Commission recognises that coercionand violence have been used against com-munities affected by dams. All projectproponents – public and private – need tocommit to the strict prohibition of such actsof intimidation against any stakeholders.

1.4 Decisions on projects affectingindigenous and tribal peoples areguided by their free, prior andinformed consent achieved throughformal and informal representativebodies.

International law includes a body of con-ventions and customary norms that increas-ingly recognise the rights of indigenous andtribal peoples. Aspects of the national lawsof many countries now reflect contemporaryviews of indigenous rights.2

Some of these changes are a direct responseto indigenous peoples’ campaigns demand-ing social justice and development opportu-nity – including campaigns concerningdams. However, these provisions have notbeen very successful in protecting the rightsof indigenous and tribal peoples.

To the extent that historical and presentinjustices continue to deny indigenous andtribal peoples the right to self-determina-tion, countries increasingly recognise thatthey are entitled to distinct measures toprotect their rights. This recognition hasincluded prescriptions of non-discrimina-tion, cultural integrity, control over landand resources, social welfare and develop-ment and self-government.

Identification of indigenous and tribalpeoplesSeveral countries have clear laws andprocedures identifying and recognisingindigenous and tribal peoples. However, thesituation is unclear in some other countries.

At its broadest, the adjective ‘indigenous’ isapplied to any person, community or beingthat has inhabited a particular region orplace prior to colonisation. However, theterm ‘indigenous peoples’ has gained curren-cy internationally to refer more specificallyto long-resident peoples, with strong cus-tomary ties to their lands, who are dominat-ed by other elements of the national society.

The general trend in the United Nationsand other international organisations has

Demonstrating publicacceptance, and

upholding negotiateddecisions, is bestachieved through

binding and formalagreements.



been to accept that many of the so-called‘tribal peoples’ of Africa, Asia and thePacific are indistinguishable from indige-nous peoples as far as international law andstandards are concerned.3 The InternationalLabour Organisation’s (ILO) Convention169 applies to both indigenous and tribalpeoples and thus includes many suchpeoples from Asia and Africa. It ascribes thesame rights to both categories withoutdiscrimination. Article 1(2) of ILO Con-vention 169 notes: ‘Self-identification asindigenous or tribal shall be regarded as afundamental criterion for determining thegroups to which the provisions of thisConvention apply.’

In countries that do not explicitly defineindigenous and tribal peoples, the Commis-sion proposes an alternative approach foridentifying them. Several internationalorganisations and agencies have adopted orproposed this approach which uses thecriteria listed below to recognise indigenousand tribal peoples.4 In terms of this ap-proach, the requirements for free, prior andinformed consent should apply to groupsthat satisfy the following criteria:

■ Historical continuity with pre-colonialsocieties, which is determined on thebasis of the following criteria, regardlessof whether they are formally recognisedas indigenous or tribal peoples or not:

■ Subsistence oriented and naturalresource based production systems

■ Presence of customary social andpolitical institutions

■ An indigenous language, oftendifferent from the national language

■ An experience of subjugation, exclusionor discrimination, whether or not theseconditions persist.

■ Vulnerability to being disadvantaged inthe development process.

■ Close attachment to ancestral territoriesand to natural resources in such areas.

■ Self-identification as distinct from thedominant group or groups in societies,and identification by others as membersof a distinct group.

Securing free, prior and informed consentThe requirement for free, prior and in-formed consent gives indigenous and tribalcommunities the power to consent toprojects and to negotiate the conditionsunder which they can proceed. The effec-tive implementation of this practice marks asignificant step forward in recognising therights of indigenous and tribal peoples,ensuring their genuine participation indecision-making processes and securingtheir long-term benefits.

The concept of free, prior and informedconsent achieved through formal andinformal representative bodies should guidedecision-making on dams and their alterna-tives. Moreover, the Commission believesthat all countries should be guided by theconcept of free, prior and informed consent,regardless of whether it has already beenenacted into law.

Failing that, decisions should only be madefollowing a process of good faith negotia-tions that allows for the effective represen-tation of the peoples’ concerned, includinggenuine attempts to reconcile differencesthrough the mutually agreed dispute resolu-tion process, with disagreements beingreferred to a designated judicial body.

The customary laws and practices of theindigenous and tribal peoples, national lawsand international instruments will guide the

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manner of expressing consent. At the begin-ning of the process, the indigenous and tribalpeoples will indicate to the stake-holder forumhow they will express their consent to deci-sions. A final agreement on how to expressconsent will be reached before the start of theplanning process.



Rationale

Dams have delivered benefits to society, buthave also caused serious social and environ-mental harm. Many of the controversiesover dam projects have focused attention onwhether a dam was the most appropriateresponse to a development need or objec-tive, and whether these were correctlyidentified in the first place. In some casesproject objectives were not clearly stated,particularly in relation to broader nationaland local development goals. In others, thedecision to proceed with a dam was takenbefore considering all options or followingstrong backing from specific constituenciesthat undermined options assessment. Thisfailure to assess strategic options rigorouslyat an early stage has led to a number ofdisputes.

Often dams take a long time to come onstream, delaying the delivery of benefits.Because they are high cost investments theydivert resources and can exclude other optionsthat may be able to deliver benefits morequickly. These options includedemand side management,alternative supply side technolo-gies and improving and expandingthe performance of existingsystems. There are also some newoptions reaching the stage wherethey can compete in the market,for example renewable technolo-gies for electricity generation suchas wind and solar power.

Options assessment involves determining therelevance of individual options or a mix of


Comprehensive Options Assessment

Options assessmentinvolves determining therelevance of individualoptions or a mix ofoptions to respond todevelopment needs in aspecific location.

Alternatives to dams do often exist. To explore these alternatives, needs for water, foodand energy are assessed and objectives clearly defined. The appropriate developmentresponse is identified from a range of possible options. The selection is based on a compre-hensive and participatory assessment of the full range of policy, institutional, and technicaloptions. In the assessment process social and environmental aspects have the same signifi-cance as economic and financial factors. The options assessment process continues throughall stages of planning, project development and operations.

Key Message


2.1 Development needs and objectives areclearly formulated through an open andparticipatory process before the identifica-tion and assessment of options for waterand energy resource development.

2.2 Planning approaches that take intoaccount the full range of developmentobjectives are used to assess all policy,institutional, management, and technicaloptions before the decision is made toproceed with any programme or project.

2.3 Social and environmental aspects are giventhe same significance as technical,

economic and financial factors in assess-ing options.

2.4 Increasing the effectiveness andsustainability of existing water, irrigation,and energy systems are given priority inthe options assessment process.

2.5 If a dam is selected through such acomprehensive options assessmentprocess, social and environmentalprinciples are applied in the review andselection of options throughout thedetailed planning, design, construction,and operation phases.

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options to respond to develop-ment needs in a specific location.The challenge is to assess a widerrange of alternatives earlier in theprocess. Experience has shownthat this needs to be done in atransparent and participatorymanner ensuring that human,social, environmental, technical

and financial considerations get equal weightin the final decision. The increased availabili-ty of information about the expanding rangeof alternatives provides a sound base fromwhich to draw.

An early focus on options assessment willexclude most questionable projects. Thosethat emerge will enjoy wider public supportand legitimacy. It can reduce delays andadditional costs and conflicts, benefiting allthose affected by a project. In addition tosocial and environmental advantages,increased investment in options assessmentcan result in long term economic andfinancial benefits.

The outcome may not be as simple as ‘builda dam’ or ‘do not build a dam’, but could bea set of parallel and complementary inter-ventions that together meet the definedgoals. Where a large dam is selected, thereare a number of options within the projectthat can avoid, minimise and mitigateadverse social and environmental impacts.These options relate to altering the size andlocation of the project and designingappropriate operating rules.

Elaboration of the PolicyPrinciples

2.1 Development needs and objectives areclearly formulated through an openand participatory process before theidentification and assessment ofoptions for water and energy resourcedevelopment.

Strategic Priority 1 presents a new perspec-tive on identifying development needs basedon recognising rights and assessing risks. Itintegrates the planning function of govern-ments in the water and energy sectors withlocal processes to determine needs. This isconsistent with a move towards a morestrategic planning process that identifiesoptions to meet expressed needs.

National policy statements on water re-sources, agriculture, energy and the environ-ment should embody guiding principles thatfacilitate a more open process of needsassessment. Policy formulation should be aparticipatory process that lays the founda-tion for the involvement of affected groupsthroughout later stages of needs and optionsassessment.

Effective participation depends on locallyappropriate processes that define the form ofparticipation and the method for consolidat-ing needs identified at local, sub-nationaland national level. Institutions or bodiesrepresenting communities should be clearlydefined. Strategic Priority 5 discusses otherkey attributes of participation. The needsassessment will provide a framework forassessing options and linking expressedneeds to development objectives for specificbeneficiary groups.

2.2 Planning approaches that take intoaccount the full range of developmentobjectives are used to assess all policy,institutional, management, and techni-cal options before the decision is madeto proceed with any programme orproject.

Once the planning process has clearlydefined needs, development objectives andintended beneficiaries, it will need mecha-nisms to assess the appropriateness ofoptions and for the participation of stake-holder groups. Assessing options should start

An early focus onoptions assessment can

reduce delays andadditional costs and

conflicts, benefiting allthose affected by a

project.



early in the planning process and can beincorporated into master plans and sectorplans using strategic impact assessments andother planning tools. Comprehensiveoptions assessment must precede selection ofany specific development plan, whether itincludes a dam or an alternative.

The range of options being examined at theoutset will be broad and go beyond techni-cal alternatives to consider relevant policy,programme and project alternatives. Itshould also consider:

■ institutional changes and managementreforms that could influence consump-tion patterns, reduce demand, and affectthe viability of other supply options;

■ the river basin context, cumulativeimpacts and interactive effects, includingthe interaction between surface andgroundwater resources;

■ multipurpose functions of alternatives;

■ secondary local and regional develop-ment effects of alternatives;

■ subsidies that can distort comparison ofalternatives;

■ life cycle analysis to compare electricitygeneration alternatives; and

■ the gestation period required beforebenefits are delivered.

A major consideration in selecting optionsis assessing institutional capacity for imple-mentation. If capacity is weak for a particu-lar option, and strengthening measures orexternal support are not viable, then theoption should be rejected.

Multi-criteria analysis is a mechanism foroptions assessment. Selection criteria usedin the analysis must explicitly reflect howeach option affects the distribution of costs,benefits and impacts for each stakeholdergroup and how it responds to development

objectives. The reasons for rejecting optionsshould be clear to stakeholders.

2.3 Social and environmental aspects aregiven the same significance as techni-cal, economic and financial factors inassessing options.

Future decision-making must increase thesignificance of social and environmentalconsiderations, bringing them to the fore-front of the screening process as is alreadythe practice in some countries.The focus must shift from mitiga-tion and compensation to makeavoidance and minimisation ofsocial and environmental impactsfundamental criteria guidingoptions assessment. This ap-proach will give society a betterchance to set thresholds for whatis acceptable and what is not, toconsider long term priorities, and to rejectoptions that are unlikely to meet avoidanceand minimisation principles. Stakeholdersmust agree on guiding principles to mitigateand compensate for the social and environ-mental consequences of options that remainon the table before taking further decisions.

Environmental issues needing considerationinclude impacts on natural ecosystems andwater quality and the implications of thedifferent options for local, regional andtransboundary effects. For example recentresearch shows that some reservoirs emitgreenhouse gases. With climate changeemerging as a key factor in decisions onenergy options, reducing greenhouse gasemissions and maintaining climate stabilityrequires a concerted global response.

Each case is location specific and informeddecisions need an enhanced local knowl-edge base on social and environmentalfactors. Requirements include:

Avoidance andminimisation of socialand environmental impactsmust become fundamentalcriteria guiding optionsassessment.

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■ social and ecosystem baseline studies atan early stage to describe existing condi-tions and resource endowment;

■ determination of the relative weighting ofenvironmental and social aspects inrelation to technical, economic andfinancial aspects through an open process;

■ a strategic impact assessment to deter-mine environmental, social, health andcultural heritage impacts of alternativesand reject inappropriate alternatives atan early stage; and

■ explicit assessment of future net green-house gas emissions of a project.

2.4 Increasing the effectiveness andsustainability of existing water, irriga-tion and energy systems are givenpriority in the options assessmentprocess.

Planning must give priority to makingexisting water, irrigation, and energy systemsmore effective and sustainable before takinga decision on a new project. The potential ishighly location specific, therefore assess-ment will require detailed in-countryreviews that cut across sectoral boundariesand go beyond technical responses toinclude consideration of policy options. Themanagement of existing water and energysystems will require a more pro-active andintegrated response in order to achieve thesegains. Strategic Priority 3 covers servicesprovided by existing dam projects which area subset of existing water and energy sys-tems.

The energy sector can apply a range ofmeasures to encourage more efficientproduction, lower distribution losses andreduce consumption. Similar opportunitiesexist to use alternative supply sources andconservation measures to provide watersupplies for disadvantaged communities.

In the irrigation sector, enhancing existingsystems by fulfilling undeveloped potentialand increasing the productivity of wateroffers the best alternative to new construc-tion. However, improving existing systemsdoes not necessarily help to address theneeds of the poorest sections of society. Theoptions assessment process needs to consideralternative means to increase livelihoodopportunities and local food security. Thisshould include an objective assessment ofthe potential for local community basedprojects and other alternative or comple-mentary measures.

2.5 If a dam is selected through such acomprehensive options assessmentprocess, social and environmentalprinciples are applied in the review andselection of options throughout thedetailed planning, design, construc-tion, and operation phases.

Following a decision to proceed with a damproject, decisions must be taken to deter-mine its precise location, alignment andheight, the availability and sources ofconstruction materials, the impact of theconstruction process, the operationalcharacteristics of the proposed dam, and thedetails of water and power distributionsystems. Each of these decisions has furthersets of alternatives. The process adopted forselecting alternatives requires the samemulti-criteria approach proposed for theearlier stages of options assessment. It mustgive due prominence to social and environ-mental considerations and to participatoryprocesses for decision-making. Principlesagreed during the initial screening ofoptions remain relevant when deciding onoptions relating to the project developmentand operations phases. Strategic Priorities 1,4 and 5 provide further guidance on thesematters.



Rationale

Most large dams that will operate in the 21st

century already exist. A number of countrieshave not realised the full benefits of existinglarge dams because of:

■ incomplete investments in deliverysystems;

■ lack of integration with associatedsystems such as local and national gridsand agricultural extension services;

■ lack of equity consideration in allocationof project benefits;

■ poor maintenance; and

■ ineffective and outdated management.

In other cases, dam owners have not maderegular investments in monitoring, ongoing

maintenance, modernisation and renovationdue to institutional or financial limitations.In many settings owners have not donesystematic assessments of opportunities foroptimising or expanding facilities to im-prove the services existing dams provide.

Opportunities to improve the efficiency,environmental and social performance ofexisting dams and optimise their benefitsmust be taken. One of the most strikingfeatures is the persistence of social andenvironmental problems arising from pastprojects. Often promises of compensationand other benefits like local power supplyand social amenities for resettled and hostcommunities have not been kept. In manycases such promises were informal, making


Addressing Existing Dams

Opportunities exist to optimise benefits from many existing dams, address outstanding socialissues and strengthen environmental mitigation and restoration measures. Dams and the contextin which they operate are not seen as static over time. Benefits and impacts may be transformedby changes in water use priorities, physical and land use changes in the river basin, technologicaldevelopments, and changes in public policy expressed in environment, safety, economic andtechnical regulations. Management and operation practices must adapt continuously to changingcircumstances over the project’s life and must address outstanding social issues.

Key Message


3.1 A comprehensive post-project monitoring andevaluation process, and a system of longer-term periodic reviews of the performance,benefits, and impacts for all existing largedams are introduced.

3.2 Programmes to restore, improve and optimisebenefits from existing large dams are identi-fied and implemented. Options to considerinclude rehabilitate, modernise and upgradeequipment and facilities, optimise reservoiroperations and introduce non-structuralmeasures to improve the efficiency of deliveryand use of services.

3.3 Outstanding social issues associated withexisting large dams are identified andassessed; processes and mechanisms are

developed with affected communities toremedy them.

3.4 The effectiveness of existing environmentalmitigation measures is assessed andunanticipated impacts identified; opportuni-ties for mitigation, restoration and enhance-ment are recognised, identified and actedon.

3.5 All large dams have formalised operatingagreements with time-bound licenceperiods; where re-planning or relicensingprocesses indicate that major physicalchanges to facilities or decommissioning,may be advantageous, a full feasibility studyand environmental and social impactassessment is undertaken.

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compliance more difficult toachieve. Governments, industryand dam owners also recognise,often informally, that pastmistakes should not be repeated;yet they remain as an unresolvedlegacy.

The WCD Knowledge Baseprovides many examples wherethe services provided by olderdams have been restored orextended in time. In many other

cases retrofitting existing dams with moreefficient, modern equipment and controlsystems has achieved significant improve-ments in benefits, extending facilities andoptimising operations.

The recent trend to optimise reservoiroperations for new and older dams usingdecision support systems backed by moreaccurate and timely data on river flows isparticularly relevant. While opportunitiesmust be assessed on a case-by-case basis,good practice is to consider such measures as

a ‘new supply option’ where theypresent significant, cost effectiveopportunities.

Experience shows that, condi-tions permitting, this approachcan increase hydroelectricbenefits by 5 to 10% over rule-based operating criteria withoutadversely affecting other wateruses. This is a trend in Canada,

the United States and Europe where opera-tors are seeking full benefits from existingassets in response to power sector deregula-tion and competition. In some cases, opti-mising operations of a system of dams canpostpone the need for new projects. Theseexperiences are not confined to developedcountries.5

Finally, it is evident that many existingdams do not have formal operating agree-ments, licences or concessions, particularlyin the case of publicly owned irrigation andwater supply dams. Wider participation inimportant management and operationaldecisions requires clear procedures andsupporting legal mechanisms, especiallywhen such decisions transform or transferbenefits and impacts. The absence oflicences or formalised agreements removesthe opportunity for public input and ac-countability. Where they do exist, licencesand other agreements often lack clearperformance targets, limiting public partici-pation at re-licensing reviews.

3.1 A comprehensive post-project monitor-ing and evaluation process, and asystem of longer-term periodic reviewsof the performance, benefits, andimpacts for all existing large dams areintroduced.

The WCD Knowledge Base shows thathistorically, few comprehensive post-projectevaluations have taken place after thecommissioning of large dams. This applies tovirtually all regions and countries. With fewexceptions, there has been little or nomonitoring of the physical, social andenvironmental effects of dams, a necessaryinput for such evaluations. Where post-project assessments have been undertaken,they have occurred many decades afterconstruction usually with a narrow technicalfocus and little input from stakeholders.

The WCD Knowledge Base reveals thatmany unforeseen technical, social andenvironmental issues emerge during thecommissioning phase and the first few yearsof operation. More intensive monitoring,extending from the construction phasethrough the first few years of operation,followed by a comprehensive post-project

Retrofitting existingdams with more

efficient, modernequipment and control

systems has achievedsignificant

improvements inbenefits, extending

facilities andoptimising operations.



evaluation after 3 to 5 years involvingaffected stakeholders, will help to identifyand resolve many early problems. Theevaluation will encourage compliance withall commitments and provide a milestone toverify public acceptance. The first post-project evaluation should help confirm andstrategically focus the longer-term monitor-ing programmes and provide ‘lessons learnt’for future decisions about planning, designand operations of the dam.

Because the economic life of a dam mayspan many generations, it is necessary toreview the project operation periodically inlight of the needs it is intended to meet, andthe services it can provide. These periodicevaluations at intervals of 5 to 10 yearsshould be comprehensive, integrated,cumulative and adaptive. Where dams arepart of a larger river basin and regionaldevelopment scheme, the evaluationsshould take into account basin-level evalua-tions of all project and programme compo-nents linked to the dam that affect theenvironment and society (see StrategicPriority 4).

Enabling conditions for evaluations arecontext specific and measures should buildon existing capacities. For many existingdams this will be the first evaluation of thisnature and institutional resistance totransparency may need to be overcome.Licensed private sector operators may regardsome aspects of the operation as proprietarycommercial information. An essential firststep is for governments, or their regulatoryagencies, to clearly specify the requirementsfor monitoring and evaluation in theappropriate regulations, project licences andoperating agreements.

Government guidelines need to clearlydefine roles of dam owners and operators

and stakeholders who will participate in theevaluations and set out the resources andmeans for stakeholder input and interaction.Upgrading monitoring capacity will posechallenges in many countries dueto the costs and operation ofinstruments and data systems,and because agencies other thanthe dam owners and operatorsmay be involved. Clear responsi-bilities that build on existingcapacities need to be defined andfinancial resources provided.Dam operators and the agenciesinvolved should publish monitoring resultsannually, and make results freely accessibleto all stakeholders.

3.2 Programmes to restore, improve andoptimise benefits from existing largedams are identified and imple-mented. Options to consider includerehabilitate, modernise and upgradeequipment and facilities, optimisereservoir operations and include non-structural measures to improve theefficiency of delivery and use ofservices.

Many industrialised countries are focusingon rehabilitation and modernisation torestore or extend the economic life ofexisting dams. In the last decade, many damowners have implemented techniques foroptimising reservoir operations, especiallyfor dams generating electricity. They areconsidering other measures to improveperformance and safety such as increasingspillway capacity to handle higher floods,extending reservoir storage and improvingsediment flushing techniques. While newsupply options may be needed in manycountries, restoring or extending the life ofexisting dams and, where feasible, expand-ing and improving services from existingdams provide major opportunities to addressdevelopment needs.

The first post-projectevaluation shouldprovide ‘lessons learnt’for future decisionsabout planning, designand operations of thedam.

Chapter 8


The WCD Knowledge Base identified threegeneral categories of improvement:

■ modernising and upgrading equipment andcontrols, and rehabilitating or expandingfacilities associated with the dam;

■ optimising operation of existing reser-voirs including daily and seasonal waterlevels and release patterns for single ormulti-purpose uses such as flood manage-ment and hydro generation. This can bedone for a single dam, or in co-ordina-tion with other reservoirs, lakes or watercourse diversions regulating river flow ina basin; and

■ optimising the role of the dam withinthe larger system it services. For exampleoptimising the use of surface and groundwater inputs in agriculture where water isa limiting factor, or using load manage-ment practices to optimise the co-ordination of hydro generation withother energy sources.

The potential for increasing benefits from aparticular dam, or group of dams, in a basin

depends on the specific circum-stances. Opportunities in allthree areas noted above shouldbe considered. Depending onthe situation the potential maybe considerable.

Other measures have shownpotential to improve the per-formance of existing dams andthe services they provide. Forexample, experience is growingwith flushing and sluicingpractices during monsoon floods

to reduce sedimentation and restore livestorage in certain types of reservoirs. Accel-erating the pace of investment in secondaryand tertiary canal systems and drainage cansignificantly improve the productivity of

surface irrigation systems attached to largedams. Other non-structural tariff, institu-tional and management practices canimprove the efficiency of the irrigation andwater supply services provided by existingdams but will require sectoral initiativesthat may be beyond the mandate of a damoperator.

Improving performance begins with assess-ing each dam for potential gains frommodernisation, renovation, expansion oroptimisation of operations. Other gains cancome from investment in necessary hydro-logical monitoring equipment, computersoftware, and the preparation of basin andsystem-level optimisation plans.

This must be explicitly linked with theoptions assessment phases of planning,clearly showing the scope for improvementsto existing dams. The public should havethe opportunity to comment on a surveyassessing improvement opportunities for alldams. This should be followed by moredetailed assessments of the specific damswhich have potential for significantimprovements.

3.3 Outstanding social issues associatedwith existing large dams are identifiedand assessed; processes and mecha-nisms are developed with affectedcommunities to remedy them.

In all its public consultations, dam-affectedcommunities told the Commission aboutthe ongoing problems, broken promises, andhuman rights abuses associated with theinvoluntary resettlement and environmentalimpacts from dams. The WCD KnowledgeBase includes significant evidence of un-compensated losses, non-fulfilment ofpromised rehabilitation entitlements, andnon-compliance with contractual obliga-tions and national and international laws

Restoring or extendingthe life of existingdams and, where

feasible, expandingand improving services

from existing damsprovide major

opportunities toaddress development

needs.



(see Strategic Priority 6 and Chapter 9).While the Commission is not in a positionto adjudicate on these issues, it has suggest-ed ways to redress past and ongoing prob-lems associated with existing dams.

Existing international laws have articulateda legal premise for a right to remedy, orreparations which is also reflected in thenational legislative frameworks of manycountries.6 Reparation is defined as actionsor processes that remedy, repair, makeamends or compensate for past failures anddamages. Given the nature of damagesresulting from loss of land and a way of life,redress could include remedies that:

■ recognise the breach of the originalobligation and its consequences;

■ acknowledge claims;

■ assess damages;

■ assign responsibility; and

■ devise and implement remedial activitiesto repair the long-term and cumulativeimpact of these failures.

Assessing claims and making reparationsThe responsibility for initiating the processof reparation rests with government. Theaffected people may also file claims with thegovernment. In order to address reparationissues, the government should appoint anindependent committee with the participa-tion of legal experts, the dam owner, affect-ed people and other stakeholders. Thecommittee should:

■ develop criteria for assessing meritoriousclaims;

■ assess the situation and identify individu-als, families and communities fulfillingthe criteria for meritorious claims and

■ enable joint negotiations involvingadversely affected people for developingmutually agreed and legally enforceablereparation provisions.

States are at different stages indeveloping regulatory systemsand institutional capacityincluding dispute resolution andwill take different approaches toresolving this issue. However,where there are reasons to takeaction and alleviate hardshipsexperienced by the peopleaffected by dams constructed inthe past, there are two practicalways of addressing pressingproblems.

■ Opportunities to restore, improve andoptimise benefits from existing largedams and other river basin developmentsshould be used as an entry point to addressunmitigated social problems associatedwith the dams in that river basin.

■ In situations where no current develop-ments are envisaged but outstandingsocial problems related to dams exist,meritorious claims for redress should beprioritised and assessed on the followingbasis:

■ affected people file genuine claimsrelated to economic, social and culturalloses and unfulfilled promises;

■ the evidence accompanying claimsfiled shows that they continue tosuffer harm due to unmitigatedimpacts, and that the impact iscausally connected to the dam;

■ available mechanisms to resolve thecomplaint have been exhausted; and

■ the nature and extent of the harm.

Enabling conditionsTo exercise their right to seek a remedy,affected people need access to political andlegal systems and the means and ability toparticipate in prescribed ways. Affectedpeople should receive legal, professional andfinancial support to participate in the

In order to addressreparation issues, thegovernment shouldappoint anindependentcommittee with theparticipation of legalexperts, the damowner, affected peopleand otherstakeholders.

Chapter 8


assessment, negotiation and implementationstages of the reparation process.

Affected peoples must be defined accordingto actual experience of impacts as describedin Strategic Priority 5.2, and not by the

limited definition in originalproject documents and con-tracts. Further, damage fromdams may require assessment ona catchment basis extendingupstream and downstream.Damage assessments shouldinclude non-monetary losses.Reparations should be based oncommunity identification andprioritisation of needs, and

community participation in developingcompensatory and remedial strategies.

The nature of remediesRemedies can include restitution, indemnity(or compensation), and satisfaction. Restitu-tion can include stopping the damagingconduct or carrying out the original obliga-tion. Indemnity involves the payment ofmoney for losses incurred, such as paymentsto compensate for loss of assets, property,and livelihoods and a variety of remedialactions, including resettlement plans anddevelopment programmes. Satisfactionincludes other forms of reparation to addressany non-material damage, including publicacknowledgement of damage and an apology.

Responsibility for reparationsReparations may involve multiple actorsincluding states, financing institutions,international organisations, and privatecorporations. It is the State’s responsibilityto protect its citizens, including their rightto just compensation. However, internation-al organisations party to foreign investmentagreements also have obligations andresponsibilities to the rights and dutiesspecified in the UN’s declarations and

instruments. The World Bank group’sinspection panel and the InternationalFinance Corporation (IFC) / MultilateralInvestment Guarantee Agency (MIGA)office of the Compliance Advisor / Ombuds-man acknowledge the responsibilities of thefinancier to comply with specific regulatoryand operational policies governing itsoperations.

In a number of instances, efforts to assigncorporate responsibility for non-complianceor transgressions related to social andenvironmental elements of a project haveled to complaints filed in a corporation’shome country.

The roles and responsibilities of all partiesinvolved in planning, financing, buildingand operating the dam must be clearlyestablished in the process of hearing andassessing a claim by an independent com-mittee constituted by the government inconsultation with the affected people andother stakeholders.

Financing reparations and compensationWhile financing reparations may posesignificant challenges this should not nullifylegitimate claims. Priority must be given tofinancing a negotiated reparation planbefore funding new dam projects in aspecific location or river basin in a country.

Reparations can be financed with fundsfrom national, provincial, and / or localgovernment budgets, a percentage of loansand grants or a percentage on currentincome from energy and water managementprojects. Such funds could be allocated to atrust fund to benefit the community overthe long term (see Strategic Priority 6 formore information on trust funds). Throughchanges in dam operations or other means,reparations can take the form of allocations

To exercise their rightto seek a remedy,

affected people needaccess to political andlegal systems and the

means and ability toparticipate in

prescribed ways.



of non-monetary resources, including land,water, fish and access to sacred sites.

An independent committee should beempowered to collect, manage, and awardreparations. To ensure that decisions con-form to the laws of the country and tointernational laws, such committees shouldinclude legal representatives selected bygovernment and affected communities.Parties contributing to the fund should berepresented to ensure transparent use oftheir funds. Accountability of the partiesresponsible for reparation should be ensuredthrough contracts and legal recourse.

3.4 The effectiveness of existing environ-mental mitigation measures is assessedand unanticipated impacts identified;opportunities for mitigation, restora-tion and enhancement are recognised,identified and acted on.

The impact of large dams upon naturalecosystems and biodiversity is a majorconcern. In the past few decades, somecountries have made considerable invest-ments to alleviate these impacts. Wide-spread concern remains that dams elsewherecontinue to result in significant, and evenunnecessary, negative impacts on a widerange of natural ecosystems and on thepeople that depend on them. These ecosys-tems perform functions such as flood allevia-tion and yield products such as wildlife,fisheries and forest resources. They are alsoof aesthetic and cultural importance formany millions of people.7

A range of measures is available to enhanceand restore ecosystems from their man-modified state, and many are already in useworldwide. In many cases these efforts aremotivated by emergent environmentalconstraints and changing communitypriorities, as in the case of efforts to combat

increasing salinity in theMurray Darling Basin inAustralia, or the new SouthAfrica Water Act whichreallocates water rights. Atleast five countries (UnitedStates, Japan, Australia, Brazil,and France) are assessing theefficiency of existing fishpasses and recommendingimprovements to design andoperation. The design of the Mohale dam inLesotho has been modified to allow largerflows, in anticipation of the results of theenvironmental flow studies currently beingcompleted.

Many dams in the United States have alsobeen modified to allow for larger flows.Countries such as South Africa, Senegal andCameroon have introduced artificial floodreleases to maintain downstream floodplainsof value to local people. This technique isused on the Columbia River system in theUnited States to reduce problems with totaldissolved gases that can kill valuable fish.

There are a number of barriers and con-straints to overcome. Continuous monitor-ing is a prerequisite to identify and assesswhat the actual impacts are and the possibleeffect of mitigation and restoration meas-ures. Resources for implementing monitor-ing must be integrated in the project cost.Clear guidelines on environmental monitor-ing and a response to deal with impacts areneeded. Other constraints will have to beaddressed, particularly for privately devel-oped hydropower projects that involve long-term supply contracts negotiated on previ-ous release patterns. Contracts for a speci-fied time period may not anticipate orallocate responsibility for periodic changeswithin the contract period, and wouldrequire renegotiation.

Countries such asSouth Africa, Senegaland Cameroon haveintroduced artificialflood releases tomaintain downstreamfloodplains of value tolocal people.

Chapter 8


3.5 All large dams have formalised operat-ing agreements with time-boundlicence periods; where re-planning orre-licensing processes indicate thatmajor physical changes to facilities ordecommissioning may be advanta-geous, a full feasibility study andenvironmental and social impactassessment is undertaken.

Many dams, particularly irrigation and watersupply dams, do not have operating agree-ments or licences. Where they do exist theyare time-bound agreements. They generallyset out the obligations of the public agencyor private entity operating the dam, andprovide a legal basis for stakeholders toparticipate, in an open and transparentmanner, in important decisions regardingphysical changes in facilities or reservoiroperations.

Licences or operating agree-ments provide requirements forphysical, environmental andsocial impact monitoring,contingency plans, operatingstrategies, the specific require-ments for publication of moni-toring and operating results, andrequirements for the periodic

needs and performance review of existingdams noted earlier. Given the ageingpopulation of dams, safety issues requiremore attention in the form of inspections,routine monitoring, evaluations, surveil-lance systems, and regularly updated emer-gency action plans. Where practical andfeasible, it is also important to update damsto contemporary standards, especiallyregarding spillway capacity and resistance toearthquakes.

There is a trend towards formal licensing ofnew and existing dams operated by publicand private agencies. This applies particular-ly to single purpose hydropower dams and

multi-purpose dams with power compo-nents. Licences for private owners are time-bound and are reviewed at periods of 20 to40 years, or more frequently, depending onthe country’s policy and regulations. Thereare recent examples where public agenciesand private owners alike have had to applyfor licences for existing dams when newregulations were introduced. Such licencesidentify activities which the existing own-ers, including the government, need tocomply with. They range from introducingand reporting on monitoring programmes todam safety inspections. Harmonising thelicence expiry dates for all dams in a partic-ular river basin may have benefits in somecases, for example a cascade sequence ofdams where interactive effects and cumula-tive impacts are a consideration.

Where re-licensing processes are in place,decommissioning may be an option. Thisoption usually arises where a dam hasexceeded its useful life, where safety reasonsmake it less expensive to remove the damthan to rehabilitate it, or where the costs(including environmental costs) of furtheroperation outweigh the benefits. Experiencewith decommissioning is growing in NorthAmerica and Europe.8

The effects of decommissioning, particularlyon the natural environment where ecosys-tem restoration is a young science, have yetto be determined. In some cases environ-mental restoration has been well served bydecommissioning, in others negative effectshave been observed. Decommissioning oflarger dams, particularly those with a highbuild-up of sediments in the reservoir maybe problematic, especially if the dam is to beremoved and the sediments released down-stream. Removal of the dams may havemany consequences on land use in upstreamand downstream areas and on other socio-

There is a trendtowards formal

licensing of new andexisting dams operated

by public and privateagencies.



economic values and should be subjected toenvironmental, social, technical and eco-nomic assessment in the same way that newdams are.

Based on the range of issues that may surfacewith decommissioning, a feasibility studyshould be carried out to select the overallbest solution, considering economic, envi-ronmental, social and political factors.

The challenge in licensing is that manycountries have insufficient legal frameworksand there may be no consensus on theappropriate level of regulation and licens-ing. New institutional arrangements may benecessary to formalise licensing operatingagreements in many countries. At presentthe institutional responsibility for differentaspects of the operating agreement may belocated in different institutions. Anotherbarrier to overcome is that some existing

dams may not have physical provisions toaccommodate all the changes in regulationand meet all current standards.

Chapter 8


Rationale

Since the 1970s a growing understanding ofnature as the basis for long term human wellbeing has replaced the view that it is an arrayof replaceable inputs to the developmentprocess. The 1992 Earth Summit in Rio de

Janeiro, Brazil established thecritical link for all countriesbetween a healthy environmentand economic development,refuting the idea that this is only aluxury for rich countries. Subse-quently 177 countries in the worldhave accepted, approved, oracceded to the BiodiversityConvention and 122 to theRamsar Convention on Wetlands.

Rivers and catchmentsRivers and catchments are particularly impor-tant because even relatively small changes inland-use, pollution or flows can have far-reaching effects. These often extend thousandsof kilometres downstream to the deltas ofmajor rivers and even to the coastal andmarine environments. Mounting globalpressure on water resources, and the fragmen-tation by dams of 60% of the world’s rivers,makes these ecosystems an urgent globalconcern.9

Dams disrupt the existing pattern of wateruse and reallocate water to new uses. Wherewater is abundant, or where few peopledepend on fish, floodplains or deltas for


Sustaining Rivers and Livelihoods

The 1992 Earth Summitin Brazil established the

critical link for allcountries between a

healthy environment andeconomic development,

refuting the idea that thisis only a luxury for rich

countries.

4.1 A basin-wide understanding of theecosystem’s functions, values and require-ments, and how community livelihoodsdepend on and influence them, is requiredbefore decisions on development optionsare made.

4.2 Decisions value ecosystems, social andhealth issues as an integral part of projectand river basin development and prioritiseavoidance of impacts in accordance with aprecautionary approach.

4.3 A national policy is developed for maintain-ing selected rivers with high ecosystemfunctions and values in their natural state.

Rivers, watersheds and aquatic ecosystems are the biological engines of the planet. They arethe basis for life and the livelihoods of local communities. Dams transform landscapes andcreate risks of irreversible impacts. Understanding, protecting and restoring ecosystems atriver basin level is essential to foster equitable human development and the welfare of allspecies. Options assessment and decision-making around river development prioritises theavoidance of impacts, followed by the minimisation and mitigation of harm to the health andintegrity of the river system. Avoiding impacts through good site selection and projectdesign is a priority. Releasing tailor-made environmental flows can help maintain downstreamecosystems and the communities that depend on them.

Key Message

When reviewing alternative locations fordams on undeveloped rivers, priority is givento locations on tributaries.

4.4 Project options are selected that avoidsignificant impacts on threatened andendangered species. When impacts cannotbe avoided viable compensation measuresare put in place that will result in a net gainfor the species within the region.

4.5 Large dams provide for releasing environ-mental flows to help maintain downstreamecosystem integrity and communitylivelihoods and are designed, modified andoperated accordingly.




their livelihoods, this process can oftenproceed smoothly. Where water is scarce,heavily used or supports economically orsocially important ecosystems, this redistri-bution can lead to irreversible impacts,losses, inequities and conflicts. Changes toriver flow, leaching of toxic elements fromthe reservoir bottom, and the creation ofnew habitats for disease vectors in slowflowing irrigation and drainage canals canall impact negatively on human and ecologi-cal health.

Equitable water useRiver water is a common resource thatshould serve the good of all riverine inhabit-ants and the environment in an equitableand sustainable manner. Water reallocationthrough dams should explicitly take accountof existing uses, and of the species andecosystems the water supports. Many of thebroader values that rivers provide are toooften ignored in project planning andappraisal. The natural resources associatedwith rivers directly support natural habitatsand the livelihoods and cultural values ofmillions of people worldwide. Rivers mayalso hold deep spiritual meaning for commu-nities and societies.

The State must use effective mechanisms forsharing the available water between users,bearing in mind the balance betweendifferent uses – irrigation, water supply,power generation, and ecosystem – and thelivelihood and quality of life needs ofriverine communities.

The construction and operation of manylarge dams have had significant, and oftenirreversible, effects on many rivers, riverineecosystems and communities. These activi-ties threaten the sustainability of theunderlying ecological processes that main-tain habitat and biodiversity. Countries that

have ratified the Convention on Biodiversi-ty and the Ramsar Convention on Wetlandscan use the provisions and guidance of theseconventions to assist in meeting sustainabil-ity objectives.

Weighing negative and positive impactsDams can reduce the risks of flooding.However, especially in many developingcountries, reduced flooding may also in-crease risks for local people by adverselyaffecting downstream fisheries, grazing andcrop production. In all cases, negativeeconomic and social impacts must beweighed equally against positive impacts.

In the past, dam construction has causedenvironmental damage due to poor assess-ments, vested interests, lack of knowledge,lack of enforcement of mitigation measures,lack of sufficient resources, lack of ongoingmonitoring or ignorance of ecosystemfunctions. Research will contin-ue to improve knowledge andunderstanding of ecosystemcomplexity. However it isdifficult to mitigate all ecosys-tem impacts and ecosystemresponses are rarely fully pre-dictable. A multi-layeredapproach is needed that priori-tises avoidance, especially insensitive areas, and has in-builtchecks that adapt and respond to observedecosystem changes.

The policy principles presented here providea framework for the range of measuresneeded to ensure protection and health ofecosystems in planning, construction andoperation of dams and their alternatives. Nosingle principle can be fully effective inisolation from the others nor can a singleministry or agency be responsible for them all.Ecosystem issues are best addressed through a

The natural resourcesassociated with riversdirectly support naturalhabitats and thelivelihoods and culturalvalues of millions ofpeople worldwide.

Chapter 8


holistic view of the river, with all actorsincorporating an ecosystem approach intotheir planning, operations and monitoring.


4.1 A basin-wide understanding of theecosystem’s functions, values andrequirements, and how communitylivelihoods depend on and influencethem, is required before decisions ondevelopment options are made.

The river basin is the natural geographicalunit to assess impacts on ecosystems andlivelihoods.

Effective avoidance,minimisation and mitiga-tion of negative environ-mental impacts from largedams and their alternativesrequire good baselineinformation and scientificknowledge of the riverineecosystem, gathered overseveral years. The flow ofwater links riverine ecosys-tems, establishing a contin-

uum from the top of the catchment to theocean. Upstream water resource develop-ments cannot be separated from theirdownstream implications.

Considering the ecosystemTherefore, project proponents must assessthe ecosystem consequences of the cumula-tive impact of dams, dam induced develop-ments and other options along the fulllength of the river reaching as far as thedelta, even where this extends into neigh-bouring provinces or countries. Where theresources of riparian communities could benegatively affected they should be consultedon the proposal before decisions are made(see Strategic Priorities 5 and 7).

4.2 Decisions value ecosystems, socialand health issues as an integral partof project and river basin develop-ment and prioritise avoidance ofimpacts in accordance with a precau-tionary approach.

Large dam projects have frequently incorpo-rated environmental and social considera-tions too late in project planning to allowtheir full integration into project choice anddesign. Environmental Impact Assessments(EIA) are often seen simply as an obstacle tobe overcome in getting clearance andapproval for the project. Consultants andagencies involved in planning should focuson ecosystem, social and health issues at thesame time that economic and technicalstudies for options assessment begin. Planningteams should explicitly incorporate ecosystem,health and social findings in the final choiceof project through multi-criteria analysis.

Strategic impact assessment during theoptions assessment stage should includeindependent and comprehensive assessmentof ecosystem, social and health impacts andevaluation of any cumulative or inter-basinimpacts. An independent panel could beused to support impact assessment.

Alternatives to large dams are frequentlyavailable, and negative impacts of large damprojects vary hugely due to site selectionand the design of elements such as itsheight, intakes, outlets and gates. By delib-erately setting out to avoid projects with themost serious and damaging negative im-pacts, project outcomes will prove moresustainable and acceptable in future.

The precautionary approachThe precautionary approach requires Statesand water development proponents toexercise caution when information isuncertain, unreliable, or inadequate and

The flow of water linksriverine ecosystems,

establishing a continuumfrom the top of the

catchment to the ocean.Upstream water resourcedevelopments cannot be

separated from theirdownstream implications.



when the negative impacts of actions on theenvironment, human livelihoods, or healthare potentially irreversible. It thereforeforms part of a structured approach to theanalysis of risks arising from water and otherdevelopment proposals. The precautionaryapproach is also relevant to risk manage-ment. Determining what is an acceptablelevel of risk should be undertaken through acollective political process. The processshould avoid unwarranted recourse to theprecautionary approach when this canoverly delay decision-making. However,decision-makers faced with scientific uncer-tainty and public concerns have a duty to findanswers as long as the risks and irreversibilityare considered unacceptable to society.

A precautionary approach therefore entailsimproving the information base, performingrisk analysis, establishing precautionarythresholds of unacceptable impacts and risk,and not taking actions with severe orirreversible impacts until adequate informa-tion is available, or until the risk or irrevers-ibility can be reduced, making outcomesmore predictable. Normally the burden ofproof will be on the developer.

4.3 A national policy is developed formaintaining selected rivers with highecosystem functions and values intheir natural state. When reviewingalternative locations for dams onundeveloped rivers, priority is givento locations on tributaries.

States should have a policy that excludesmajor intervention on selected rivers topreserve a proportion of their aquatic andriverine ecosystems in a natural state. Thepolicy should be an integral part of theoverall national water policy.

A growing number of countries have re-sponded to increasing development pressure

on rivers by setting aside certain reaches, orentire rivers, from development. For exam-ple, by 1998 the United States had designat-ed 154 rivers under the ‘Wild and ScenicRivers Act’, covering 17 200 km of a total5.6 million kilometres of rivers in thecountry. Sweden has set aside four entirerivers from hydropower development, andNorway has ‘protected’ 35 % of its hydro-power potential from development. Zimba-bwe has passed similar legislation for riverspecific protection orders. President KimDae Jung of Korea cancelled adam on the Tong River in June2000 and declared the areaprotected for its natural andcultural values.

This approach helps to recon-cile development of thenatural resource base with the need tomaintain genetic diversity as a potentialresource for human development in fieldslike medicine. It also respects the intrinsicvalue of rivers. To put this policy intopractice, the State, appropriate researchinstitutions, communities and NGOs mustgather the essential baseline information toinform the policy from a holistic nationalperspective. Gathering this informationallows the country to select the least envi-ronmentally damaging options wheneverdams emerge as the best option in theplanning process. It enables the country tocombine river development with riverprotection, achieving a balanced outcomethat satisfies the objective of sustainabledevelopment at national and local levels.

Floodplain ecosystems and migratory fish arefrequently associated with the lower stretch-es of the main-stems of rivers and theirdeltas. They are often particularly importantresources for local people, especially in

Determining what is anacceptable level of riskshould be undertakenthrough a collectivepolitical process.

Chapter 8


developing countries. In many cases main-stem dams have negatively affected thealready fragile livelihoods of downstreamriverine communities. Priority under thepolicy should therefore be given to alterna-tive sites on the tributaries where impactsare likely to be less than on the main-stem.

4.4 Project options are selected thatavoid significant impacts on threat-ened and endangered species. Whenimpacts cannot be avoided viablecompensation measures are put inplace that will result in a net gain forthe species within the region.

Too often, planned measures to mitigateimpacts on threatened or endangeredspecies have been inadequate. Failure istypically due either to insufficient knowl-edge and understanding of the ecosystems

concerned, inadequate plans,or lack of institutional andregulatory capacity toenforce environmentalmitigating measures.

Dam proponents have oftenover-confidently assumedthat mitigation measures willwork, rather than making

them work. Responsibility for their imple-mentation may be spread across manyactors. This situation has contributed to asignificant increase in the rate of extinctionof species sharing our planet.

Respecting international guidelines toreduce impactsGovernments have often agreed interna-tional guidelines on environmental issues,yet the record of implementation is poor.The existing international conventionscontain agreed legal provisions for biodiver-sity protection and sustainable developmentissues, including measures for conserving thebiodiversity of inland waters, assessing the

international importance of wetlands ordeveloping national wetland policies. MostStates have ratified the UN Convention onBiological Diversity and the Ramsar Con-vention on Wetlands and they shouldurgently apply their guidelines. This willhelp to avoid negative impacts on rare andthreatened species. States that have not yetratified the Conventions are encouraged todo so, and in the meantime to respect theirprovisions.

Compensation plansWhere significant impacts on threatened orendangered species are considered unavoida-ble, after exhausting other water and energyoptions and other dam project options,project authorities should put in place acredible and monitored compensation plan.This should ensure that the populationstatus of the species within the region showsa net gain that adequately compensates forloss of habitat to the project. Such compen-sation can include protecting other habitats,restoring the species in other locations andcaptive breeding programmes. The projectauthorities will finance compensation as anintegral part of project costs for the life spanof the project. If monitoring indicatescompensation is not effective, then addi-tional measures will be required.

4.5 Large dams provide for releasingenvironmental flows to help maintaindownstream ecosystem integrity andcommunity livelihoods and aredesigned, modified and operatedaccordingly.

Dam owners have often viewed releasingwater from a dam for purposes other thanpower generation or water supply as a wasteof a valuable resource. Some agencies havedeclared it their aim to prevent a single dropof water from reaching the sea. Yet twenty-nine countries use environmental flowreleases (EFR) from dams to maintain a

The project authoritieswill finance

compensation as anintegral part of project

costs for the life span ofthe project.



sustainable balance between the purpose ofthe dam and the needs of downstreamecosystems and resource users. Elevencountries are considering implementingEFRs.10 This reflects the growing realisationthat water and rivers support many complexprocesses that must be maintained toachieve sustainable development. Damsshould now be specifically designed torelease the necessary flow of good qualitywater. Targeting particular ecosystemoutcomes increasingly results in flow releas-es that go beyond the historical notion of a‘minimum release’, often arbitrarily fixed at10% of mean annual flow. A minimumrelease may serve to keep the river wet but itmay not be an ecologically effective meas-ure.

Where downstream livelihoods depend onfloodplains the release may take the form ofa managed flood. Senegal, South Africa andCameroon all operate dams to flood valua-ble downstream floodplains that benefitrural communities. These managed floodsmaintain hundreds of thousands of hectaresof grazing land and important fisheries.

Legal measures are often required to enableimplementation of environmental flows.One example is the new South AfricanWater Act. This Act recognises that theultimate aim of water resource managementis to achieve sustainability for the benefit ofall users and that the protection of thequality and quantity of water resources is

necessary to ensure sustaina-bility of the nation’s waterresources. Therefore the Actdesignates a ‘reserve’ thatmust be identified before anyauthorisation of waterabstraction for other purpos-es. This basic reserve con-tains the minimum quantityand quality of water requiredto satisfy basic human needs,protect aquatic ecosystemsand secure the sustainable development anduse of the water resource in question. TheAct opens the way to establishing theenvironmental flows required to maintainecosystems.

Locally driven processes toestablish the objectives of envi-ronmental flows will lead toimproved and sustainable out-comes for rivers, ecosystems andthe riverine communities thatdepend on them. Ecosystemresponses to dam operatingregimes are variable, so damowners should undertake regularmonitoring and a five yearlyevaluation of environmentalperformance. This evaluationshould inform modification ofenvironmental flows where necessary (seeChapter 9).

Locally drivenprocesses to establishthe objectives ofenvironmental flowswill lead to improvedand sustainableoutcomes for rivers,ecosystems and theriverine communitiesthat depend on them.

Chapter 8



Recognising Entitlements and Sharing Benefits

Rationale

In the past, dams have displaced peoplefrom their habitats and livelihoods withoutgiving them any control over alternatives.Besides those whose land and homes wereinundated, the adversely affected peopleincluded natural resource dependent river-ine communities living upstream and

downstream of the dam and inother affected areas. Becausesome groups were not recognisedas affected, the number ofadversely affected people hasbeen underestimated. Non-recognition, or partial recogni-tion, of the entitlements ofthose identified as affected hasresulted in inadequate restitu-

tion for losses. As a result dam projects haveoften impoverished adversely affectedpeople.

A negotiated process to identify thoseaffected and develop legally enforceablemitigation and development measuresdepends on a number of enabling condi-tions. Adversely affected people need toshow acceptance of the dam project byconsenting to the process and to the mitiga-tion and development measures. Thesemeasures should include a share in projectbenefits and redress and recourse mecha-nisms.

The policy principles in this strategicpriority relate closely to those in StrategicPriority 1 and Strategic Priority 4 and should

5.1 Recognition of rights and assessment ofrisks is the basis for identification andinclusion of adversely affectedstakeholders in joint negotiations onmitigation, resettlement and developmentrelated decision-making.

5.2 Impact assessment includes all people inthe reservoir, upstream, downstream and incatchment areas whose properties,livelihoods and non-material resources areaffected. It also includes those affected bydam related infrastructure such as canals,

Joint negotiations with adversely affected people result in mutually agreed and legallyenforceable mitigation and development provisions. These provisions recognise entitlementsthat improve livelihoods and quality of life, and affected people are beneficiaries of theproject. Successful mitigation, resettlement and development are fundamental commitmentsand responsibilities of the State and the developer. They bear the onus to satisfy all affectedpeople that moving from their current context and resources will improve their livelihoods.Accountability of responsible parties to agreed mitigation, resettlement and developmentprovisions is ensured through legal means, such as contracts, and through accessible legalrecourse at national and international level.

Key Message

transmission lines and resettlementdevelopments.

5.3 All recognised adversely affected peoplenegotiate mutually agreed, formal andlegally enforceable mitigation, resettle-ment and development entitlements.

5.4 Adversely affected people are recognisedas first among the beneficiaries of theproject. Mutually agreed and legallyprotected benefit sharing mechanisms arenegotiated to ensure implementation.


Recognition of rights isan important element

in establishing theexisting entitlements of

adversely affectedpeople at various

locations.



be read in conjunction with those strategicpriorities.


5.1 Recognition of rights and assessmentof risks is the basis for identificationand inclusion of adversely affectedstakeholders in joint negotiations onmitigation, resettlement and develop-ment related decision-making.

Recognition of rights is an important elementin establishing the existing entitlements ofadversely affected people at various locations.Existing entitlements are the basis for negoti-ating new entitlements. The project processrecognises a range of entitlements includingthe entitlement of affected parties to:

■ participate in negotiating the outcomesof the options assessment process;

■ participate in negotiating the implemen-tation of the preferred option and

■ negotiate the nature and components ofmitigation and development entitlements.

Comprehensive assessment of the natureand extent of risks implied by a projectallows for accurate assessment of the socio-economic conditions and the cultural contextof the potentially affected people. The socio-economic, cultural, political and healthimpacts must be identified through a numberof assessment methods such as Social ImpactAssessment (SIA), Health Impact Assessment(HIA), impoverishment risk analysis andcultural heritage impact assessment withactive participation of the affected people.

5.2 Impact Assessment includes all peoplein the reservoir, upstream, downstreamand in catchment areas whose proper-ties, livelihoods and non-materialresources are affected. It also includesthose affected by dam related infra-structure such as canals, transmissionlines and resettlement developments.

The impact assessment studies must identifyand delineate various categories of adverselyaffected people in terms of the nature andextent of their rights, losses and risks. Socio-economic, demographic and health bench-mark surveys of all adversely affectedpopulations must be completed and publiclyreviewed prior to drafting mitigation,resettlement and development plans.

This process will facilitate assessment of theactual magnitude, spread and complexity ofimpacts and implications for people depend-ent on riverine ecosystems. This signals adeparture from the way that social impactswere assessed in the past and will empowerthe planners and stakeholders to incorporatethe full extent of social impacts and losses inthe decision-making process. It will achievea holistic approach to social impacts arisingfrom dams and their infrastructure in riverbasin contexts. Such an approach is applica-ble to all options, dams and their alterna-tives, and will create a level playing field inthe options assessment process.

5.3 All recognised adversely affectedpeople negotiate mutually agreed,formal and legally enforceable mitiga-tion, resettlement and developmententitlements.

In order to enable all categories of affectedpeople identified in 5.2 to regain andimprove their livelihoods and welfare,mitigation and resettlement measures shouldbe considered as a development opportunityfocusing on a number of fundamental inputs:

■ compensation for lost assets throughreplacement, substitution, cash andallowances;

■ livelihood restoration and enhancementin the form of land-for-land options;

■ sustainable non-agricultural employmentand other measures;

Chapter 8


■ a share in project benefits and otherdevelopment measures; and

■ access to primary services such as school-ing and health care.

For compensation to create effective newentitlements, customary and legal rights,and the future value of land and commonproperty resources must all be acknowl-edged. To reach agreement and preventfuture disputes, a transparent and legallyenforceable mechanism must exist to

calculate the replacementvalue of all affected assets. Tocheck against under-valuationof assets, the date for calculat-ing the value of assets mustmatch the date of payment.

In the past, cash compensationhas proved ineffective in re-creating lost assets and oppor-tunities in less monetised

economies and should be avoided. Wherepeople prefer cash compensation, it must bepaid with adequate safeguards that enhancelong term livelihood sustainability. Regain-ing lost livelihood requires adequate leadtime and preparation and therefore peoplemust be fully compensated before relocationfrom their land, house or livelihood base. Ifcompensation payment is delayed, intereston the compensation amount must be paidto account for inflation

Agreeing on mitigation, resettlement anddevelopmentMutually agreed mitigation, resettlementand development provisions should beprepared jointly with the participation of allaffected people, government and the devel-oper. Sustainable mitigation, resettlementand development provisions and opportuni-ties include:

■ resettlement with land-for-land, sustain-able non-agricultural employment and /or other development provisions;

■ resettlement as a community or viablesocial unit;

■ resettlement close to the original habitatfor effective community recovery;

■ protection against land alienation tosecure negotiated entitlements; and

■ other livelihood support measuresincluding: agricultural support; access toforests, grazing lands and other commonresources; access to livelihood resourcesfor all adult members including women;and livelihood resources with the poten-tial to sustain future generations.

Implementing a mitigation, resettlementand development planStakeholders must set up a high level multi-stakeholder committee representing govern-ment, the developer and affected communi-ties. The committee will be responsible fordirecting implementation of the mitigation,resettlement and development programmeand will serve as an appeals forum to hearcomplaints and resolve disputes. A Mitiga-tion, Resettlement and DevelopmentAction Plan (MRDAP) accepted by theaffected people should be formalisedthrough two legally binding contractualagreements.

■ a master contract that outlines theobligations of government and thedeveloper to carry out the actions set outin the MRDAP in time and to the fullextent. The master contract will alsospecify penalties, incentives and reme-dies to facilitate compliance by govern-ment and the developer. The financialand other resources to fully comply withthe MRDAP have to be secured prior tosigning the master contract.

Regaining lost livelihoodrequires adequate lead

time and preparation andtherefore people mustbe fully compensated

before relocation fromtheir land, house or

livelihood base.



■ performance contracts jointly signed bygovernment and the developer withindividual families and the communityspecifying entitlements (compensation,resettlement where necessary and directbenefits from the project), deliveryschedule, and recourse procedures.

In order to guarantee implementation, aperformance bond should be considered aspart of the master contract in the case ofprivate sector developers. See Policy Princi-ple 6.2 under Strategic Priority 6 for adiscussion of performance bonds.

While the high level multi-stakeholdercommittee will carry out preliminary disputeresolution and grievance redress functions,the master and performance contracts aremeant to empower communities and fami-lies to seek redress from courts within thecountry as a final resort.

The contracts signed before constructionstarts remain in effect through the operationphase. Signing of master and performancecontracts, and demonstration by govern-ment and the developer of their capacity tofulfil their respective commitments signifiesconsent by the affected people to move theproject from the design stage to the con-struction stage.

5.4 Adversely affected people arerecognised as first among the benefi-ciaries of the project. Mutuallyagreed and legally protected benefitsharing mechanisms are negotiatedto ensure implementation.

People adversely affected by a dam projectshould be the first to benefit from theproject. Appropriate mechanisms should beintroduced to ensure equitable distributionof development opportunities generated bythe dam.

The benefits could be related toproject finance, reservoir construction,operation, downstream release andrevenue sharing. The benefits undereach category are elaborated in theGuideline 20 in Chapter 9. Examples ofopportunities include preferential fishingrights on reservoirs, land in the irrigationcommand area, rights to draw downlands, equity shares, rural electrificationfrom power generated, ownership oftourist facilities, custodian-ship overwildlife and other natural resources.11

The adversely affected people shouldparticipate in the identification, selec-tion, distribution and delivery of bene-fits. The adversely affected people,government and the developer / finan-cier should assess and agree on the levelof benefits. As a general principle, thelevel of benefits should be sufficient toinduce demonstrable improvements in thestandard of living of the affected people.

All categories of affected people - displacedand those located upstream, surrounding thearea of the reservoir, downstream of the damand host communities for resettlement shouldbe considered eligible in principle. They couldbenefit in varying degrees, or they couldbenefit equally, depending on the extent ofrisk the dam poses to their livelihoods.

Benefits could be the in the form of communi-ty assets or services; and could be individualand household focused. Once the stakeholdershave agreed on the type and level of benefits,they need to decide on delivery mechanismsand timing. Commitments on benefits fromthe project should form part of the perform-ance contracts with affected families and thecommunity.

Chapter 8


Rationale

Governments and other stakeholders needto be satisfied that once informed decisionsare made, all parties will ensure that they

monitor and comply withobligations throughout the lifeof a project. While there aregood examples of the develop-ment of innovative complianceguidelines, the WCD Knowl-edge Base demonstrates failureon the part of developers andothers to fulfil all voluntary andmandatory obligations for theassessment and implementationof approved projects. As noted

in the Global Review, the failure to complywith obligations has led to impoverishment

of affected peoples, under-performance andenvironmental degradation resulting inlegitimate criticism and a serious breakdownin stakeholder trust and confidence in theprocess, implementation, and outcomes ofdecision-making.

Many States and international financinginstitutions have comprehensive policies,criteria and guidelines for implementing adam project once the decision to build istaken. In the case of technical requirements,the contracting process clearly lays out theresponsibilities, tasks, monitoring tools,indicators, rewards and penalties associatedwith contract implementation. Contractstypically provide for a penalty or bonus forlate or timely completion and the posting of

Strategic Priority 6Ensuring Compliance

Governments and otherstakeholders need to be

satisfied that onceinformed decisions are

made, all parties willensure that they monitor

and comply withobligations throughout

the life of a project.

Ensuring public trust and confidence requires that governments, developers, regulators andoperators meet all commitments made for the planning, implementation and operation ofdams. Compliance with applicable regulations, criteria and guidelines, and project-specificnegotiated agreements is secured at all critical stages in project planning and implementa-tion. A set of mutually reinforcing incentives and mechanisms is required for social, environ-mental and technical measures. These should involve an appropriate mix of regulatory andnon-regulatory measures, incorporating incentives and sanctions. Regulatory and compli-ance frameworks use incentives and sanctions to ensure effectiveness where flexibility isneeded to accommodate changing circumstances.

Key Message


6.1 A clear, consistent and common set ofcriteria and guidelines to ensure compli-ance is adopted by sponsoring, contract-ing and financing institutions andcompliance is subject to independent andtransparent review.

6.2 A Compliance Plan is prepared for eachproject prior to commencement, spellingout how compliance will be achieved withrelevant criteria and guidelines andspecifying binding arrangements forproject-specific technical, social andenvironmental commitments.

6.3 Costs for establishing compliancemechanisms and related institutionalcapacity, and their effective application,are built into the project budget.

6.4 Corrupt practices are avoided throughenforcement of legislation, voluntaryintegrity pacts, debarment and otherinstruments.

6.5 Incentives that reward project proponentsfor abiding by criteria and guidelines aredeveloped by public and private financialinstitutions.



a performance bond by the general contrac-tor for the site.

Resettlement, environmental mitigationand compensation are rarely, if ever, subjectto such rigorous design processes andcontractual terms. Often, these activities arecarried out by government ministries oragencies and are not covered by contractualobligations. Where they exist, contracts forsocial and environmental programmes areoriented towards task completion, withoutany rewards or penalties related to compli-ance with relevant criteria and guidelines.Where resettlement numbers are underesti-mated, there may be no clarity on whichagency or firm – aside from government – isresponsible. When funds are not available forprogramme completion, or there is a lack ofaccountability, failure to resolve outstandingsettlement cases has led to long-standingproblems with displaced groups.

Trust and confidence in the capacity andcommitment to meet obligations must berestored if new projects are to create morepositive development outcomes and avoid thelevel of conflict that has occurred in the past.This requires the formation of new relation-ships and new and more effective means ofensuring compliance.


6.1. A clear, consistent and common set ofcriteria and guidelines to ensurecompliance is adopted by sponsoring,contracting and financing institutionsand compliance is subject to independ-ent and transparent review.

All project participants, including govern-ment agencies, multilateral, bilateral andcommercial financing institutions, privatesector developers and NGOs should adopt aclear set of criteria and guidelines for

developing water and energyresources. This will provide aframework for assessing compli-ance internally and externallyand demonstrating compliancein a transparent manner tostakeholders.

There are already many excellentsets of criteria and guidelines forplanning, project assessment,project construction and opera-tions. The WCD Criteria andGuidelines elaborated in Chap-ter 9 are not intended to be exhaustive.Rather they provide a set of conditions thatmust be fulfilled to restore the level of trustand confidence in the project process.

The first step is to ensure that each particu-lar project participant makes a bindingcommitment to the criteria and guidelinesthat apply to them. This should includegovernment agencies, bilateral and multilat-eral financing institutions, private sectordevelopers and NGOs. In the case ofgovernment agencies, this may involveincorporating particular criteria into theregulatory frameworks, operational proceduresand staff guidelines. For private sector devel-opers this may involve obtaining certification,adopting internal practices and procedures,establishing codes of conduct or entering intointegrity pacts, to ensure compliance with bestsocial and environmental practice.

Ideally, participants should not only acceptthe WCD recommendations, but alsoharmonise their criteria and guidelines withthose of other bodies. Not every detail needsto be the same, but all project participantsshould use common parameters. For exam-ple, different international financing agen-cies or national and provincial authoritiescan harmonise their criteria and guidelines.

All project participants,including governmentagencies, multilateral,bilateral and commercialfinancing institutions,private sectordevelopers and NGOsshould adopt a clear setof criteria and guidelinesfor developing water andenergy resources.

Chapter 8


By harmonising the criteria they employ forsocial and environmental management,multi-lateral and bilateral financiers, includ-ing Export Credit Agencies, will preventdevelopers from turning to financiers withweak guidelines to fund unacceptableprojects. Project participants will reduceneedless duplication of effort by employing astandard set of guidelines and tools such asstrategic impact assessment and environmen-tal impact assessment to bring projects todecision points in a more timely and less costlymanner.

Ensuring compliance with criteria andguidelinesProject participants, in particular govern-ment and developers will have to show thatthey have lived up to their commitments inorder to restore trust and confidence in theprocess. An external review process involv-ing an Independent Review Panel could bethe best way to achieve this (see Guideline22 in Chapter 9). Advancing the use of suchpanels will require:

■ establishing an accredited list of expertsthrough a multi-stakeholder advisorygroup;

■ giving such panels the power to invokethe ‘stop lights’ that the CompliancePlan will establish; and

■ ensuring information from the independ-ent panel is available to the public.

Another mechanism that can be used eitherwith, or separate from, an IndependentReview Panel is independent certification.To obtain certification, participants mustshow they conform with internationalstandards for practices and proceduresthrough regular monitoring and review byan accredited external body.

This has a number of potential practicalmanifestations in the case of dams. These

include the development of a stewardshipcouncil on dams or the development of anInternational Organisation for Standardiza-tion (ISO) standard for dam management .

In recent years the Forestry StewardshipCouncil (FSC) has made rapid progress oncertification in the forest products industry.The FSC has the capacity to influencebehaviour through the certification of aninternationally traded product.

Advancing the systematic management ofdams-related impacts through existingrecognised international standards, such asthe ISO, has the distinct advantage oftapping into an existing and long-standinginternational structure and network. TheCommission encourages industry, andparticularly dam operators, to adopt ISO14001 within a broader compliance frame-work that includes performance bonds,integrity pacts, and other tools.12 ISO-basedstandards such as the ISO 9000 and 14000series could be supplemented by a sectorspecific technical specification document fordams, incorporating the Commission’s finalrecommendations and guidelines.

This would require agreement and effort onthe part of industry, multilateral banks,NGOs and affected peoples groups, togetherwith willingness on the part of the ISO todevelop the specification (see recommenda-tion in Chapter 10). The development of aninternational certification system based onthe Commission’s report cannot replace theintegration of its guidelines into nationalregulatory frameworks by governments. Itshould be seen as a complementary ap-proach, not as an alternative. It wouldencourage the private sector to promote andadapt standard voluntary codes of conductincreasingly required in today’s competitivemarkets.



6.2. A Compliance Plan is prepared foreach project prior to commencement,spelling out how compliance will beachieved with relevant criteria andguidelines and specifying bindingarrangements for project-specifictechnical, social and environmentalcommitments.

Different States are at different stages indeveloping regulatory systems and institu-tional capacity and their systems will evolveto reflect their particular circumstances. Thenature of existing systems will influence therange of compliance measures available.How these measures interrelate to achieve asatisfactory compliance package will need tobe determined on a case by case basis.

An overarching Compliance Plan is the bestway to ensure that compliance activities andmeasures are effectively pursued and imple-mented, and should be developed for eachproject. This plan will set out how thedeveloper will ensure compliance withproject related obligations. It may refer toregulatory and non-regulatory processes andobligations. Where the plan relies upon theState’s institutional capacity to ensurecompliance, the developer may have toenhance this institutional capacity beforethe project proceeds. The measures takenneed to create trust and confidence that theCompliance Plan can and will be met.

In considering the range of tools and mech-anisms available to ensure compliance,greater use should be made of existingconditions directly linked to achievingongoing compliance. These conditions needto be built in at key stages of the projectcycle to provide maximum incentive tocomply. In States with well-developedregulatory systems and institutional arrange-

ments (including judicial processes), greaterreliance can be placed upon direct regula-tion. Where regulatory systems and support-ing institutions are still evolving, the role offinanciers, insurers and contractors, and theavailability of a broad range of non-regulato-ry measures will be of particular importancein assisting States to proceed with accepta-ble developments.

Binding arrangements must be in place forsocial and environmental measures. Theagreed terms of resettlement and environ-mental management conditions need to beincorporated into legally binding andpublicly available documents, and into anyrelevant statutory approvals issued by theState.

Two mechanisms, used withsignificant success in other fields,can be applied to dam relatedprojects to ensure fulfilment ofcommitments. They are:

Performance bonds, backed byfinancial assurances, to providefinancial security that obligationswill be met (such as guaranteeingthe fulfilment of performancecontracts to fulfil social and environmentalcommitments), and

Trust funds to hold and manage funds setaside for a particular purpose (such asresettlement or environmental measures).

Both of these measures can provide Statesand stakeholders with a means of achievinga new level of trust and confidence incompliance, particularly in relation to:

■ the need to ensure that the full costs ofresettlement and environmental per-

An overarchingCompliance Plan is thebest way to ensure thatcompliance activitiesand measures areeffectively pursued andimplemented, andshould be developedfor each project.

Chapter 8


formance, including monitoring andauditing, are met;

■ the need to secure sufficient financialsecurity up front to protect the State andthe community from the risk of default;and

■ the importance of providing a financialincentive to the contractor to completeenvironmental and rehabilitation works.

Social and environmental performancebonds, supported by adequate financialassurances to cover identified resettlementcosts and environmental measures should beposted before project work starts. Suchperformance bonds are already used for the

technical components of damprojects. Other types of projectscarrying high environmentalrisk have also used themsuccessfully.

In cases where performancebonds are not appropriate, suchas those where the State is thedeveloper, trust funds should beused to achieve the sameobjective. Trust funds arewidely employed to ensure thatfunds are used for a designated

purpose. They can be employed to holdfunds for dam related resettlement andenvironmental measures and for monitoringand auditing costs through the life of theproject. The trust fund deed needs to bepublicly available and the trustees need tobe independent from the project sponsors.

Trust funds can be effectively used eitheralone or in conjunction with performancebonds to secure financing for ongoingmonitoring and auditing obligationsthroughout the life of the project. Thesemechanisms also provide an effective means

for holding and distributing royalties to fundongoing initiatives.

As with the granting of operating licences,all contingencies cannot be anticipated. Abalance must be struck on a case by casebasis between providing the necessary levelof certainty to stakeholders that commit-ments will be met, and sufficient flexibilityto accommodate open and transparentadaptive management.

6.3. Costs for establishing compliancemechanisms and related institutionalcapacity, and their effective applica-tion, are built into the project budget.

Arrangements need to be put into place toensure that the costs of implementing theCompliance Plan are built into the projectbudget. Where projects are developed by theprivate sector the State and affected peopleshould be satisfied that these costs are fullyfinanced and that appropriate arrangementsare in place to link compliance to key stagesin the project cycle.

When additional institutional capacity isrequired, the costs should be explicitlyincluded under funding for complianceactivities. Compliance activities represent atransaction cost associated with the projectand should be treated as such. Competingoptions may impose differing complianceburdens on society. This should be reflectedin analysing the acceptability of theseoptions. Past experience shows that there isan inherent risk of failure in both thesatisfactory completion of the task and theeffort to ensure and enforce compliance.

Because of the high cost of compliance andthe risk of failure, a project’s ability todeliver on the Compliance Plan must beexplicitly addressed in the multi-criteriaanalysis to assess options.

Social andenvironmental

performance bonds,supported by adequate

financial assurances tocover identified

resettlement costs andenvironmental

measures should beposted before project

work starts.



6.4 Corrupt practices are avoidedthrough enforcement of legislation,voluntary integrity pacts, debarmentand other instruments.

All States need to adopt and implementcommon and consistent anti-corruptionlegislation. Chapter 6 outlines progressmade on this front, particularly through theratification of the OECD Convention onCombating Bribery of Foreign PublicOfficials in International Business Transac-tions.

Implementation, monitoring and enforce-ment of such agreements will depend on theresources dedicated to such efforts andexisting business practice. Integrity Pactscan be employed as a project-specificmechanism to complement national legisla-tion. These pacts have the advantage of notrequiring explicit legislation and can beused without waiting for lengthy legislativeprocesses where laws do not exist.

An Integrity Pact is a voluntary undertakingthat sets the contractual rights and obliga-tions of all the parties to a procurementcontract. This eliminates uncertaintiesabout the quality, applicability and enforce-ment of laws in a specific country. IntegrityPacts can create greater trust and confidencein the decision-making process, a morehospitable investment climate and publicsupport for government procurement andlicensing programs.

The Integrity Pact has two principal goals,namely to enable:

■ companies to abstain from bribery byproviding assurances that competitorswill also abstain from bribery and thatgovernment procurement agencies willfollow transparent procedures and

prevent corruption, including extortionby their officials; and

■ the State to reduce the high costs anddistortion of public procurement proce-dures caused by corruption.

6.5 Incentives that reward project propo-nents for abiding by criteria andguidelines are developed by publicand private financial institutions.

Compliance with norms, regulations andpractices often becomes widespread when thecost of compliance falls below thecost of non-compliance. Enforcingregulations and agreements is oneway to support this process.

The level of risk and the transac-tion costs of constructing damshave risen steadily due to theconflict over dams. This givesproject developers a financial incentive tocomply with the Commission’s recommen-dations in order to reduce conflict, leadingto an improvement in market access,financing terms and profitability.

A project following the WCD Criteria andGuidelines is likely to be:

■ an economically, socially and environ-mentally sound project; and

■ a project that has achieved publicacceptance through an inclusive partici-patory process of needs and optionsassessment.

This will clearly entail additional up-frontcosts but this investment will bear fruit laterin terms of reduced risk and increasedbenefits.

The importance of public recognitionshould not be underestimated. Compliance

Compliance activitiesrepresent a transactioncost associated with theproject and should betreated as such.

Chapter 8


Compliance incentivescould include awards,

prizes, and other formsof public recognition in

the dams community,introducing healthy

competition to do better.

incentives could include awards,prizes, and other forms of publicrecognition in the dams commu-nity, introducing healthy compe-tition to do better. Sanctionsshould include public exposureand debarment, either temporaryor permanent, from participationin tenders and contracts.

Private sector financial serviceproviders and internationalfinancial institutions (IFIs) mustwork together to ensure thatprojects and companies thatcomply with the WCD Criteriaand Guidelines have access to

one or more of the following incentives:

■ enhanced access to private equitycapital;

■ better terms on debt finance (loans) andinsurance products;

■ lower rates on bond financing;

■ improved accounting for environmentalassets and liabilities;

■ preferential and expanded access to debtfinancing from IFIs and their privatesector windows;

■ risk guarantees from IFIs; and

■ interim credit mechanisms to assistpipeline projects to implement WCDrecommendations.

In the case of IFIs many ofthe policies, procedures andinstruments are already beingdeveloped. In the case ofprivate sector instrumentsthere is a continued need forinnovation in order toconvert adherence to criteriaand guidelines into tangible

benefits for the socially and environmental-ly responsible investor. A few examples ofpromising mechanisms to encourage inves-tors to comply with criteria and guidelinesare listed below:

■ Socially Responsible InvestingThe current growth in socially responsibleinvesting (SRI) in both United States andEuropean Markets far outstrips the growth of‘traditional’ investment funds and provides awindow of opportunity for financingprojects that emerge from proper optionsassessment.

■ Lower Cap on Insurance LiabilityPremiums in the insurance industry arepartly based on the extent of a project’sliability. A lower cap on liability for damprojects certified as complying with theWCD Criteria and Guidelines could bearranged particularly where legally bindingarrangements that reduce the risk of non-compliance are in place.

■ Bond Rating SystemsBonds are increasingly used at the sovereignand corporate level for infrastructureprojects. A rating system similar to theStandard & Poor credit-worthiness ratingthat reflects compliance could favour WCDcompliant bonds.

■ Accounting for Environmental Costsand Liabilities

Projects that adopt the WCD Criteria andGuidelines will present a more transparentpicture of the environmental costs andliabilities of projects and companies. Thiswill lower their market risk and reducevolatility brought about by stakeholderactivism in this area.



Rationale

Conflict over transboundary rivers usuallyresults from a power imbalance amongstriparians where one State or province issufficiently influential to exert its authorityover others. Generally upstream States areconsidered to be in a more influentialposition as they can control the watersource, but regional power imbalances mayalso make it possible for downstream ripari-ans to exert influence over upstream States.Similar conflicts may also occur withinStates where rivers cross internal politicalborders.

Storage and diversion of water on transboundary rivers13 has been a source of considerabletension between countries and within countries. As specific interventions for diverting water,dams require constructive co-operation. Consequently, the use and management of re-sources increasingly becomes the subject of agreement between States to promote mutualself-interest for regional co-operation and peaceful collaboration. This leads to a shift in focusfrom the narrow approach of allocating a finite resource to the sharing of rivers and theirassociated benefits in which States are innovative in defining the scope of issues for discus-sion. External financing agencies support the principles of good faith negotiations betweenriparian States.

Key Message


7.1 National water policies make specificprovision for basin agreements in shared riverbasins. Agreements are negotiated on thebasis of good faith among riparian States14 .They are based on principles of equitable andreasonable utilisation, no significant harm,prior information and the Commission’sstrategic priorities.

7.2 Riparian States go beyond looking at water asa finite commodity to be divided andembrace an approach that equitably allocatesnot the water, but the benefits that can bederived from it. Where appropriate, negotia-tions include benefits outside the river basinand other sectors of mutual interest.

7.3 Dams on shared rivers are not built in caseswhere riparian States raise an objection that isupheld by an independent panel. Intractabledisputes between countries are resolved

through various means of disputeresolution including, in the last instance,the International Court of Justice.

7.4 For the development of projects on riversshared between political units withincountries, the necessary legislativeprovision is made at national and sub-national levels to embody the Commis-sion’s strategic priorities of ‘gaining publicacceptance’, ‘recognising entitlements’and ‘sustaining rivers and livelihoods’.

7.5 Where a government agency plans orfacilitates the construction of a dam on ashared river in contravention of theprinciple of good faith negotiationsbetween riparians, external financingbodies withdraw their support for projectsand programmes promoted by thatagency.


Sharing Rivers for Peace, Development and Security

Such conflicts are often caused by proposals tostore or divert water by constructing dams.Experience suggests that disputes over watercan be resolved and co-operation developed,even where disagreements in other spheres ofinternational relations remain unresolved.

There are 261 international river basinsworldwide. Most do not have agreementscovering water allocation principles. Nego-tiation of such agreements between riparianStates has proceeded on a case-by-case basiswithout any overarching globally bindinglegal instrument.

Chapter 8


The 1966 Helsinki Rules on theUses of Waters of InternationalRivers adopted the principle thateach State had ‘a reasonable andequitable share in the beneficialuses of waters in an internationalbasin’, but these rules have nostatus in international law.While the principles set forth inthe Helsinki Rules representwhat many experts contend are

long accepted principles, these Rules havenot achieved the level of a binding interna-tional treaty. Until it enters into force, thisis also true of the UN Convention on theLaw of the Non-Navigational Uses ofInternational Watercourses. Through aresolution of the United Nations GeneralAssembly in 1997, this Convention attract-ed support from 103 countries, but threecountries voted against it and 27 abstained.The Convention took 27 years to developand has yet to be ratified by enough coun-tries to bring it into force. Among theopposing and abstaining countries are thosewith major dam building programmes them-selves or with an interest in restricting devel-opment projects within other riparian States.

International efforts to develop a universalframework for negotiations appear to havehad limited effect and some countries refuseto respect what can generally be consideredas a growing body of international opinion.The Commission views the principles of theUN Convention as an emerging body ofcustomary law and considers that States willreduce the possibility of conflict if they areprepared to endorse and adhere to them.This contrasts with a situation where somecountries have followed a unilateral ap-proach to the use of water resources andreject the need for an integrated basin-wideframework for water resources management.

In the absence of effective internationalagreements, other measures need to beinvoked. The ability of States to implementdam projects on shared rivers is often relatedto financial and technical support fromexternal agencies and the effectiveness ofpublic opinion in influencing public policy.

In this regard, countries fall into three broadcategories:

■ those with the financial and technicalresources to be totally independent;

■ those that require financial or technicalsupport for a significant proportion ofthe project itself; and

■ those that may be capable of undertakingthe project independently, but rely onexternal support for other projects andprogrammes in the same sector.

In addition to the application of legalprinciples, external financing agencies haveinfluenced and can continue to influencecountries in the second and third categories.In the first category, active networking acrossborders can inform public opinion and encour-age moves towards a policy of co-operation.


7.1 National water policies make specificprovision for basin agreements inshared river basins. Agreements arenegotiated on the basis of good faithamong riparian States. They are basedon principles of equitable and reason-able utilisation, no significant harm,prior information and the Commis-sion’s strategic priorities.

The approach adopted by a national or sub-national authority towards shared rivers mayhave a direct and significant influence onother water resource management strategies.The principles embodied in the 1997 UNConvention on the Law of the Non-

Experience suggeststhat disputes over

water can be resolvedand co-operationdeveloped, even

where disagreementsin other spheres of

international relationsremain unresolved.



Navigational Uses of International Water-courses warrant support. States should makeevery effort to ratify the Convention andbring it into force. Where there are obsta-cles to endorsing the Convention, thefollowing key principles it embodies can stillprovide a framework for further dialoguebetween riparian States:

■ ‘equitable and reasonable utilisation’ thatpromotes the optimal sustainable use ofthe river, taking into account the inter-ests of other riparians;

■ ‘no significant harm’ to other riparians andcompensation or mitigation for any harmcaused; and

■ ‘prior information’ referring to the need toinform other riparian States on plannedmeasures that may have a significanteffect on them.

The meaning of these terms is still evolving.Particularly, the application of the principleof ‘no significant harm’ will often conflict ata basic level with many applications of theprinciple of ‘equitable and reasonableutilisation’. These interactions have notfully been resolved legally or customarily,suggesting that in their application, theseprinciples should be read alongside theCommission’s strategic priorities whenplanning future water resources and hydro-power developments.

The Commission’s message is grounded onthe need to obtain the consent and co-operation of riparian States in the manage-ment of shared water resources includingboth consumptive and non-consumptiveuses. In addition to having ratified interna-tional agreements, individual States shouldspecifically address shared river basins intheir water policy or legislation, providingclarity on their intention to co-operate inwater resources management. For example,

this intention is reflected in the SouthAfrican National Water Act. Such provi-sions would provide a common basis forriparian States to move towardsmore integrated managementagreements for shared watercours-es. On the basis of these agree-ments, the affected States canadopt a progressive approach toinstitutional development,starting with exchange of infor-mation, joint scientific teams toanalyse data, and joint arrange-ments for monitoring the imple-mentation of agreements.

Success with a progressive approach like thiswill provide the confidence to embark onco-operation in other areas. Internationallythere is significant interest in transboundaryissues and external financing agencies haveexpressed interest in supporting riparianStates that agree on a common approach.Such financing should be provided within abroad framework of co-operation, ratherthan as a specific project-related compo-nent.

7.2 Riparian States go beyond looking atwater as a finite commodity to bedivided and embrace an approach thatequitably allocates not the water, butthe benefits that can be derived fromit. Where appropriate, negotiationsinclude benefits outside the river basinand other aspects of mutual interest.

Innovative solutions are needed to solveapparently intractable problems. Often,negotiations over shared rivers have devel-oped into disputes over allocating what mayappear as an insufficient resource. A moreequitable and sustainable resolution may bepossible by shifting from a primary focus onthe allocation of the water resource, to afocus on the benefits that derive from the

The Commission’smessage is groundedon the need to obtainthe consent and co-operation of riparianStates in themanagement of sharedwater resources.

Chapter 8


use of the water, encompassing considera-tion of wider development objectives andthe options available to meet them. Thisshift provides an opportunity to look moreconstructively at alternative programmes formeeting development objectives.

It is possible to expand the horizon ofnegotiations further to include other issuesthat optimise the comparative advantages oftwo or more States. Such synergies mayresult from differences in location, climateor resource endowment. To some extent, the

Helsinki Rules began this shift.In the wider negotiation arena,the principles of sharingbenefits can include an array ofother resources, including co-operation in other sectors, orfinancial payments.

An approach centred on widerdevelopment objectives createsa link between discussions attransboundary level andstrategic planning processes

within countries that can be used to defineneeds more clearly and map out a widerrange of alternatives. Early engagement canavoid disputes becoming polarised around aspecific project proposal and entrenchingnegotiating positions.

7.3 Dams on shared rivers are not built incases where riparian States raise anobjection that is upheld by an inde-pendent panel. Intractable disputesbetween countries are resolved throughvarious means of dispute resolutionincluding, in the last instance, theInternational Court of Justice.

Openness and information sharing is a keyfirst step in any transboundary water sharingsituation. From this can follow an independ-ent and objective assessment of the conse-quences and impacts of any proposed

intervention. Conducted in a mannerconsistent with openness and informationsharing, a competent, independent entityacceptable to all riparian States shouldconduct strategic and project-related impactassessment studies following the practiceoutlined in Chapter 9.

The level and intensity of impact assess-ments will depend on the planning stage,but in all cases should include environmen-tal, social, health and cultural heritageassessments. Safeguards are needed to ensureindependence in directing and financing theassessment team. Mechanisms such asestablishing a joint trust fund for imple-menting the assessments should be consid-ered. The impact assessments should be seenas part of the joint institutional strengthen-ing activities of riparian States to provide acommon, interactive approach and a soundbasis for political dialogue.

Where disputes cannot be resolved, anindependent panel should be establishedthat goes beyond the remit of the impactassessment. The creation and operation ofsuch a panel is defined in the 1997 UNConvention on the Law of the Non-Naviga-tional Uses of International Watercourses.Good faith negotiations may of themselveslead to mutually agreeable outcomes. In theevent that disputes remain, and if parties donot have recourse to dispute resolutionthrough international, regional or bilateralagreements, the affected parties could referthe matter to the International Court ofJustice (ICJ), either by mutual agreement, ordirectly if both parties have previouslysubmitted to the compulsory jurisdiction ofthe ICJ by declaration under Article 36 ofthe Statute of the Court.

These policy principles apply to all water-courses including tributaries. Their applica-

A more equitable andsustainable resolution

may be possible byshifting from a primary

focus on the allocation ofthe water resource, to a

focus on the benefits thatderive from the use of

the water.



tion to tributary rivers is a location specificissue dependent on the significance andrelationship of the tributary to the mainriver and the interests of riparian States. Incases where countries have already reachedbasin level agreements for the main stemriver, such agreements should be extendedto significant tributary rivers taking intoconsideration the Commission’s strategicpriorities. Where no agreements exist,riparian States should adopt an integratedapproach looking at the management of themain-stem and its tributaries within thecontext of the entire river basin.

7.4 For the development of projects onrivers shared between political unitswithin countries, the necessary legisla-tive provision is made at national andsub-national levels to embody theCommission’s strategic priorities of‘gaining public acceptance’, ‘recognis-ing entitlements’ and ‘sustaining riversand livelihoods’.

The Commission’s seven strategic prioritiesare as relevant to rivers shared across sub-national boundaries as they are to thosewholly within one province or those sharedbetween States. Where their legal systemprovides for national-level control of waterissues, States should embody the principlesof shared waters in national water legislationand develop a locally appropriate policyframework for addressing such issues. Inother cases, States at a federal level shouldexplore mechanisms to encourage goodpractice and provide incentives for compli-ance with the strategic priorities.

Although many sub-national governmentshave a mandate to manage water, a nationalor federal government may exercise sanc-tions through legislative and regulatorymechanisms and provide financial incen-tives. In many cases dam development andoperation depend on project licences issued

by national and sub-national authorities, ora mix of the two. Dam projects may also besubject to clearance from national and sub-national environmentalagencies. Both licences andenvironmental clearance canbe used to ensure that accept-ed environmental and socialprovisions are met. Wherefederal funds are sought forproject assistance, they shouldbe made conditional oncompliance with the Commis-sion’s strategic priorities. As part of theiroverall responsibility, States should be morepro-active earlier in the planning process tofacilitate resolution of disputes betweenriparian provinces.

7.5 Where a government agency plans orfacilitates the construction of a dam ona shared river in contravention of theprinciple of good faith negotiationsbetween riparians, external financingbodies withdraw their support forprojects and programmes promotedby that agency.

The international community needs to takea strong and concerted stand in the case ofshared rivers. While the decision to build adam is often considered a sovereign deci-sion, the decision of external agencies tosupport a dam depends on whether theproposed project complies with that agency’spolicies and guidelines. It is therefore ofconcern that bilateral, multilateral andexport credit agencies have not yet harmo-nised their policies towards shared water-courses. These often-inconsistent policiesmake it more difficult to improve the waytransboundary issues are handled. Thecomplexity of the situation is increased bythe disparate and fluid nature of financialsupport. This inconsistency often results insituations where, although an externalagency may not be directly financing a dam

States should embodythe principles of sharedwaters in national waterlegislation and develop alocally appropriate policyframework foraddressing such issues.

Chapter 8


on a shared watercourse, itssupport for other projects inthe same sector allowsnational resources to beallocated for this purpose.

It is essential that externalagencies harmonise theirpolicies towards sharedwaters and deal with thesector as a whole rather than

with specific projects. Such policies shouldincorporate aspects of notification toriparian States, the desirability of ‘consent’or ‘no objection’ from riparian States, and

independent expert assessment of social andenvironmental impacts.

In the absence of agreement among riparianStates, external agencies should make theirinvolvement conditional on the findings of anindependent commission as envisaged underthe 1997 UN Convention on the Law of theNon-Navigational Uses of InternationalWatercourses or other appropriate mecha-nisms agreeable to all parties. In cases whereStates proceed with projects in the absence ofsuch a commission, or reject its findings, theexternal financing agency should withdraw itssupport from the sector concerned.

Endnotes

1 For example in many Latin Americancountries (Argentina, Bolivia, Brazil, Chile,Colombia and Ecuador) and in Australia,Canada, India, New Zealand, and thePhilippines national laws recognise indige-nous people’s rights. Specific legislation onindigenous people’s rights includes thePhilippines Indigenous Peoples Rights Act(1997), Australian Aboriginal Land Rights(Northern Territory) Act 1976 and Chile’sIndigenous Law 1993. Recent Canadianpractice promotes the need for free, priorinformed consent of indigenous and tribalpeoples to projects in certain contexts.Goldzimer, 2000, soc013, WCD submission;Hart, pers. comm. 2000; IDS, 2000.

2 See endnote 1

3 Colchester, 1993, 1995; Tenant, 1994; Gray,1995; Kingsbury, 1995; Fisher, 1993; May-bury-Lewis, 1996; Daes, 1996a, p72; Pritch-ard, 1998a, p44; Pritchard, 1998b, p61. SomeAsian and African countries already acceptthat the term ‘indigenous peoples’ applies tothe ‘tribal peoples’ and ‘cultural minorities’within their borders, including Cambodia,Botswana, Nepal and Philippines. In a

landmark case for the Ainu of Japan, on 28March 1997 a local court in Sapporo,Hokkaido, recognised the Ainu as anindigenous and minority people. The AsianDevelopment Bank has also adopted a policyon ‘indigenous peoples’ to guide its opera-tions. For a more nuanced discussion of theapplicability of the concept of indigenouspeoples to Asia, see Kingsbury, 1998.

4 Daes1996b; World Bank, 1991.

5 Nepal: Modifiying the intake, installing anextra desander, dredging the forebay andrefurbishing the generators/turbines andpower house control systems at the Trushuli-Devighat hydropower station in 1995(originally built in the 1970’s) improvedaverage annual power generation by 46%.NEA 1997.

Lao PDR: Nam Ngum is a 150 MW hydro-power plant near Vientiane, the capital ofLao PDR. Surplus power is exported toThailand and the power sales agreementbetween the two countries is revised every 4years. Based on updated hydrology and othervariables, studies were undertaken tooptimise the monthly and day-to-dayoperation of reservoirs and turbines. Assum-



ing the same average tariff, revenue from powersales to Thailand increased by about 10%.Lahmeyer International, 1990.

6 Johnston, 2000.

7 Acreman et al, 2000; WCD Thematic II.1Ecosystems.

8 465 cases in the United States, 3 in France,1 in Norway, a few in Canada.

9 Revenga et al, 2000.

10 Many countries are in the early stages ofdeveloping EFRs, for example adopting andimplementing relevant legislation, makingenquiries into available environmental flowmethodologies and developing policy, but arenot necessarily at the stage of formallyundertaking EFRs or determining EFRs forfreshwater systems. At least 29 countrieshave used EFRs including: Australia, Austria,Canada, Denmark, Finland, France, Germa-ny, Hungary, Indonesia, Ireland, Italy, Japan,Korea, Lesotho, Moldavia, Namibia, NewZealand, Norway, Portugal, Puerto Rico,South Africa, Spain, Swaziland, Sweden,Switzerland, Taiwan, The Czech Republic,The Netherlands, The Ukraine, The UnitedKingdom, The United States. The followingcountries are exploring the use of EFRs:Angola, Botswana, Brazil, Chile, Israel,Mexico, Mozambique, Nepal, Thailand,Vietnam, Zimbabwe. Tharme, 2000.

11 Benefit sharing through Equity Shares-Minashtuk Project in Canada. The Minash-tuk project in Canada illustrates benefitsharing through a limited partnershipcompany. Here the Band Council of theMontagnais of Lac Saint-Jean is the majority

shareholder with a 50.1% share and HydroQuebec owns the remaining 49.9% of theshares. Minashtuk is the first project devel-oped by Hydro-Innu. Besides guaranteeing ashare in profits, it allows the Montagnais todesign a project according to their prioritiesand in the long-term reinvest the profits in amanner that supports the economic develop-ment of their community. Milewski et al1999, soc196, WCD Submission.

12 ISO 14001 is an internationally recognisedstandard that identifies the basic processes ofan environmental management system(EMS). It allows an organisation to effective-ly identify, monitor and control its environ-mental impacts. It does not specify perform-ance requirements, beyond a commitment tocomply with applicable regulations and othercommitments. The standard enables third-party certification for organisations thatconform to its specifications. While there aremany models for EMS design, the ISO 14001standard is emerging as the dominantstandard, with over 17,000 certificatesgranted as of June 2000. Concerns do,however, exist whether ISO standards canassure changed performance effectively.Corbett and Kirsch, 200.

13 ‘Rivers’ is used here as a general term. Thestrategic priority and policy principles relateequally to all types of waters which are ormight be impacted by dams.

14 The term ‘riparian State’ is used to mean anyState through which a transboundary riverflows or forms part of its boundary, or whichincludes part of the catchment area of atransboundary river.

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